dangletech

In most organizations, the responsibility for defining and pricing of jobs is a shared one between the job’s originator (a functional leader), HR, and an approving person or entity. HR though, owns managing the process in organizations that have an HR function. Depending on the size of the organization, HR will sometimes split the responsibility amongst two teams, with a subset of the HR team handling non-executive roles and compensation, and another subset of the HR team handling all executive roles and compensation.
Definition and pricing of jobs occurs for several reasons, including:
a) the need for a new role due to strategic factors (e.g. new product/new market/new channel), legislative factors (e.g. environmental/employment equity/pay equity), changing social norms (e.g. diversity/corporate social responsibility/risk management);
b) the need for a changed or expanded set of responsibilities within an existing role due to organizational design changes (e.g. restructuring requiring fewer people to do more), technological changes (e.g. implementation of technology requiring an expanded user skill set), and business changes (e.g. different go-to-market strategy requiring different selling methods);
c)the need to re-visit pricing of jobs in the market owing to a perception (based on employee feedback and/or employee departures) that the firm has underpriced the role(s).

So how does HR then go about pricing a job once the role has been defined and signed off on by all stakeholders?

HR does so in several ways. HR will approach contacts in the industry to get a sense of pricing of their jobs. Such information though is often-times guarded closely as this is viewed and justly so, as part of a firm’s competitive advantage. HR will then utilize compensation survey data, based on the surveys that HR participates in on an annual basis, or where the role is a new one and compensation data is lacking, engage an HR professional services firm with compensation expertise and a compensation survey database, to undertake a specialized and focused survey on their behalf.

So where do the lack of transparency and the increased costs occur?

Well, there are at least 6 HR professional services firms, commanding significant market share in the compensation space. As a result, organizations who wish to have access to the relevant sub-set of the universe of employers who employ individuals with like knowledge, skills, and experience, have to participate in multiple surveys with several firms to gain access to this. E.G. If I want to have the compensation information for all software engineers employed by Canadian software firms of between 50 and 500 employees, most likely, I’ll have to participate in 2-4 annual compensation surveys.

Each survey costs me 1-3 weeks of employee time preparing and analyzing information; plus several thousands of dollars to subscribe.

There is however a much better way to handle this process, and a way that would increase transparency, lower costs, and greatly reduce the transactional aspects of the HR function.

Companies need to re-think handling of job and compensation data gathering. For starters, HR departments, with CEO and Board approval,
should be looking to outsource jobs and compensation data on an industry basis to a trusted impartial third party HR professonal services firm with compensation expertise. That firm would be charged with holding this information in confidence, and updating same as requested to do so by its member companies.
Secondly, the trusted impartial third party will, in holding this data understand that under no circumstances, (as is currently the case)can they share the names of companies, nor company specific information with member companies. Rather, Companies can, at any point in time, access and update their jobs and compensation data, and request updated survey information to help them plan and validate appropriate (to the individual company’s needs), job content and compensation changes.

What is the likelihood of this coming about? Admittedly, not great. Boards and Management have their preferred HR professional services firm relationships, and there are company-driven processes that would act as barriers to this coming about.
That said, between the ultimate goal of one professional services firm being able to address a company’s entire jobs and compensation related needs and the current multi-player environment, lies a welcome opportunity for consolidation and a new approach to how HR is organized and tasked to deliver this critically important service to the company.