How do you design and update competency frameworks and pay scales for different roles and levels?

Defining roles and levels is crucial for creating a fair and motivating compensation structure. It's like setting the foundation for a building - it needs to be strong and accurate. As a leader in Business Intelligence, I've seen how clear job descriptions and evaluations can drive performance and growth. Remember, involving your team in this process can lead to valuable insights and a sense of ownership. Let's get those roles and levels defined and watch our teams soar! ???? #Leadership #CompensationManagement #TeamGrowth

Ensure that competencies are in harmony with your business direction, strategy, and desired workplace culture. Implement a robust and uniform evaluation system for employees against these competencies to establish the reliability and credibility of the level of capabilities that exist within your organization to support compensation-related decisions. This is of significant importance, mainly in terms of financial implications for both the organization and your employees.

In my previous role, revamping our competency framework and pay scales was an eye-opener. Initially, pay scales felt arbitrary. But, by analyzing skills required for each role (e.g., project management for a mid-level Marketing Manager) and aligning them with competency levels (basic, proficient, expert), we created a clearer structure. This linked pay increases to demonstrably stronger skills. For instance, a Marketing Manager showcasing expertise in project management through successful campaigns would be eligible for a higher raise than someone with just basic skills. This data-driven approach ensured fairer compensation based on competency development, motivating employees to upskill.

You don’t want to just follow what other companies are doing, e.g. paying at the market median (50th percentile), if it’s not what’s best for your talent strategy. Maybe you’re a retailer recruiting for a specific role like an eCommerce Engineer whose job is not only key to how you make money but also hard to find in the industry. In this case, you may want to pay higher than market median to beat out the competition for this role.

Take into account your organization's life stage when determining pay levels and structures. Startups may differ from companies in the same industry and market that are in the mature or declining stage of their life cycle. Additionally, consider your organization's strategy, a cost leadership strategy requires a different pay level and structure compared to a company adopting a differentiation or focus strategy.

Designing and updating competency frameworks and pay scales involves conducting job analyses to identify key skills and responsibilities for each role. Then, create competency frameworks outlining desired behaviors and skills. Assess market trends and internal equity to establish fair pay scales, considering factors like experience, education, and performance. Regularly review and update frameworks and scales to align with organizational goals, market changes, and employee development. Communication and transparency are crucial throughout the process to ensure understanding and buy-in from stakeholders.