Job Classification

What is Job Classification?

Job classification is a system designed to classify all jobs within a company and put them in a standardized scale based on the overall tasks, responsibilities, pay level, and duties associated with a specific job. Grades or job classification levels are often assigned to each job so that it can be properly organized and categorized within the company.

Although job classifications structures vary with different businesses, the overall goal is to determine job responsibilities accurately. This also helps companies compare similar jobs in different companies within their industry. Thus, a job classification system does not take into account the skill level and ability of someone currently in that position, as much as it looks at the skills and abilities needed for the position. BambooHR helps to explain what job classification means and why it can be a benefit to use in your company.

What Does Job Classification Mean?

Job classification is created to help determine what a job does for a company. It can be used for performance reviews, job listings, and determining if there is any responsibility overlap between jobs in the company. The job classification structure is meant to create standardization across a company and industry and is meant to be a tool to make sure you know what responsibilities are being determined within your business.

Why is Job Classification Important?

To completely understand what job classification means and to see why it is important to a company, look at an example of job classification. The Hay System is a popular job classification method and can help to understand job classifications better. The Hay System uses three components to classify jobs:

  1. The knowledge required to do the job
  2. The problem solving required for the job
  3. The accountability required for the job

The Hay System then takes this information and uses it to determine that there is equality within the company for both responsibilities and pay between that job and similar ones within the company.

The Hay System offers a job standard across a company and helps to determine possible needs. It makes sure that each job is being compensated fairly based on the responsibilities of that job and the responsibilities of jobs similar to it.

Job Classification Advantages and Disadvantages

One of the job classification advantages is that similar jobs can be classified and grouped together. This can help to streamline workflow and see if any groups’ tasks can be compartmentalized within the company. This can help create a broadband pay structure, meaning that pay grades are consolidated into fewer pay ranges. However, pay ranges that are wider, give an employer the ability to offer pay increases to their employees without having to promote them. This is only possible when an employer knows the jobs that are being performed within their company under a job classification method.

A disadvantage of job classification is that data pools are small because they only apply to the company that created them. This means whenever companies create a new job, the only thing you have to compare it to is the other jobs that already exist within the company. Every job would have to be reevaluated for each newly created job. Because people are heavily involved, job classification judgments are subjective to the person evaluating the job, who may misunderstand the merits and importance of a specific job. It can be useful to have someone doing the job to write up a description of the skills they use and the duties they perform in order to gain a better understanding of what the job entails.

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