In my last webinar I already discussed a fair bit around the impact of JEs on multiple HR processes but today I want to share a case study that impacts company profitability.
About a few years back a role came through to me for review. It was part of a new BU and while it wasn’t directly a business unit I supported, the role was based in Asia so it came to me for a sense check.
I did a proper JE and shared that the proposal to put the job at a Senior Director (SD) was not right and at best this was a Director role.
One of the fundamental principles of JE is that the job must be reviewed as it stands today. Feedback came that the business leader insists it should be a SD and that the in 2-3 years’ time the revenue will double. I strongly opposed and said what will happen in future will happen in future. From a role sizing, internal and external equity perspective it should be a director level at best and I emphasized that we will paying a lot more for this role than it warrants.
The business went ahead and hired a SD.
Fast forward now, the role and the business did not turn out the way it did and the role was made redundant. I have done the numbers and the cost to company difference between SD and Director role is USD 120,000/year on a target basis. This is one role.
So, for the few years we were overpaying for the role by USD 120k/year so about half a million USD minimum. This is ONE role and I while I understand this is a senior role but it’s a reminder.
For even a medium size company, if you have a few roles where you assume and force fit grades you are overpaying, impacting your bottom line. Worst off, you could have used this money and paid for roles which were under graded and been fair. Employees leave for under graded roles and then business is telling HR that are salaries are not competitive. One wrong decision impact so many other areas.
All newly graded roles and promotions must go through a standard JE process. This is how many companies control their structure cost and make it fair.
As I hear and read about the lays offs, it is very upsetting when I think about all the things companies should have done, using the right frameworks to make the right decisions.
If you are struggling with putting a Job Evaluation framework or want to know more about this please reach out to me.
