Job classification is a method of job evaluation, which is the process of determining the importance, difficulty, and value of individual positions within a company based on specific criteria. Evaluation itself means creating an internal ranking system for all roles operating within the company. As a result of this process, jobs are compared and then ranked from least to most valuable (or vice versa) according to the established criteria.

Job Classification – Definition

Job evaluation using the job classification method involves grouping positions into single-level categories and then determining the appropriate pay for them. It is one of the simplest methods of job evaluation, which also does not take much time and works well in both small companies and large organizations. However, job classification is not suitable for a large number of highly diversified positions.

How to Evaluate Jobs Using the Job Classification Method?

Job classification takes place in four stages. The first is to establish job categories and describe them in detail. This involves reviewing the positions available in the organization (or planned) and determining how many groups and what type they can be divided into. A common type of classification is categorisation by type of work, e.g.: assistants, team leaders, junior specialists, managers, senior specialists, directors.

The second step is to determine the hierarchy of categories. Here, it is necessary to establish which group is most important for the entire organization – this will also be the pay grade. We will illustrate this stage by ranking the groups mentioned above from most important to least important for organization X: directors, managers, team leaders, senior specialists, junior specialists, assistants. Usually, the higher a category's position in the hierarchy, the higher the earnings assigned to it.

The next stage is to assign jobs to specific categories, i.e., to determine their value. For example, the IT department director and the financial director could fall into the director group, while a junior accountant or junior marketing specialist could fall into the junior specialist group. The value of positions is usually assessed based on:

required experience,
required level of education,
required skills,
type and number of responsibilities assigned to a given position,
level of responsibility of a given position,
level of decision-making authority of the person holding the evaluated position,
the position's impact on the overall team's results,
the position's impact on the entire company's results,
the value of a given position in the labour market – e.g., availability of specialists, average salary, salaries at key competitors, demand for a given profession, etc.

In the final stage, a basic pay table is created, meaning minimum and maximum pay are assigned to all previously created categories, naturally taking into account all the above criteria.

Purpose of Job Evaluation

Job evaluation can serve as a baseline for determining employee salaries and maintaining appropriate balance between them. Creating such a ranking is also the basis for outlining the company's organisational structure, including defining dependencies between individual positions. Their evaluation also helps in creating career plans and setting competency requirements for employees who wish to advance. Furthermore, job classification is also a tool that can help employees understand their role within the entire organization.

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Job Classification