Why Employee Leveling Matters and How to Do It Right
By and large, your employees want to be as successful as possible in their careers.
But motivation and hard work only go so far. It’s difficult for anyone to be successful if they don’t have a clear picture of their role, the roles of others around them, and the path they can take to advance within the company.
It should be easy for employees to find out what skills they need to acquire and what responsibilities they’ll need to take on in order to move up. When done right, employee leveling provides this structure and clarity, removing much of the ambiguity around career advancement.
At a leadership level, employee leveling also helps shed light on pay inequities and gives managers a better understanding of what they can do to help their employees move ahead.
Whether your company is just beginning to discuss employee leveling, or whether you’re in the process of reevaluating your current system, the time you spend on employee leveling now will pay off later in terms of lower attrition, higher productivity, and a scalable system for organizational growth.
In this article, we talk about the implications of employee leveling, as well as how to establish job leveling at your own organization. We also share new data from Praisidio on pay inequities and employee attrition, as it relates to employee leveling.
What is employee leveling?
Employee leveling is a process of creating clear career paths and promotion requirements, then communicating those career paths to employees so they know exactly what steps they can take to get promoted.
Employee leveling is part planning, part communication, and, of course, part execution.
On the planning end, this requires clearly defining not only what roles currently exist at your company, but also what roles you’ll need in the future, based on growth and operations forecasts. Core skills, competencies, and pay structures within those roles also need to be identified.
On the communication side, all of this information must be presented to employees in a way that’s clear and easy to understand. An employee leveling matrix is a particularly handy tool for this. (We’ll talk more about how to create an employee leveling matrix a little later in this article.)
Finally, you must give employees opportunities to acquire the skills they need to advance. This can be through direct training offered by or paid for by your company. Mentoring programs and dedicated time for skill development are also valuable programs in this regard.
Job leveling is often used interchangeably with employee leveling, but it can also refer to a narrower view of employee leveling, where the planning, communication, and training are focused on a particular role within your organization.
So, within the overall umbrella of employee leveling, you’d have a specific job leveling structure for engineers, sales people, and so on.
Career leveling also sometimes gets used interchangeably with employee leveling. However, it can also be used in a narrower sense. Within an employee leveling structure, career leveling would plan and communicate advancement paths at the career level.
To clarify this distinction, a job leveling structure outlines paths to move up within a particular job role, such as moving up from Engineer I to Engineer II and so on. Career leveling outlines what an employee needs to do to move up from an engineering position, to a team lead, to a project manager and higher.
It’s wise to have both job leveling and career leveling structures under the larger umbrella of employee leveling. You can use the same process to create all of the different leveling structures across your organization.
Why employee leveling matters
From a high level, employee leveling matters because it’s an important part of improving employee retention and pay equity. Employee leveling creates transparency about what employees need to do to advance within the company and in their careers. This transparency and structure also helps support pay equity initiatives.
Clarifies skills and competencies
First and foremost, creating an employee leveling structure clarifies the skills and competency requirements for both the employer and the employee.
From the perspective of the employer, this is an invaluable tool for evaluating and advancing current employees. It goes without saying that it’s much easier — and more equitable — to make advancement decisions when the requirements for a position have been clearly defined in advance.
Above and beyond this, though, employee leveling has an even more significant impact on the employees themselves.
Creates visible and attainable career paths
Internal career opportunities matter to employees. Employees who can visualize their future at a company are more likely to stick around.
According to a recent article in Harvard Business Review, companies that offer professional development opportunities see 15% higher employee engagement and a 34% higher rate of retention.
Employee leveling communicates an action plan for employees: what they need to do to meet the requirements for advancement. Not only this, but a clear employee leveling structure also removes the murkiness that often exists around promotions.
Without an employee leveling structure, employees only see who’s being promoted, which can seem arbitrary (and might actually be somewhat arbitrary), if no requirements have been established.
Improves retention and sheds light on pay inequities
Removing the murkiness around advancement also improves pay equity, which in turn reduces the risk of employee attrition.
Regarding pay inequities, Praisidio found:
- There is a more than 40% pay discrepancy between recently promoted women and recently hired men in the same role.
- High-potential male engineers (as defined by the company) make nearly 28% more than their high-potential female counterparts.
Pay inequity influences employee attrition:
- According to data from Praisidio, underpaid employees are most vulnerable to attrition risk.
- Among people who left their positions during periods of high attrition among their peers, 90% were below the midpoint compensation for their group.
A well-established employee leveling structure helps reduce these pay equity issues. It enables leadership to cross-reference employees who are qualified for advancement with employees who are most at risk of compensation-related attrition, and use promotion as a path to increase pay for competent but underpaid employees.
How to set up job leveling at your company
Setting up a job leveling structure is a four part process. It progresses logically from planning to communication to execution. As you establish employee leveling within your organization, follow a step-by-step plan and take a data-driven approach.
Plan employee leveling paths
First, take inventory of your current roles and determine which roles you’ll need filled in the future, based on projected growth and strategic plans. Also dig into which skills your company needs in each role, based on your industry and organizational structure.
Going through this process and being as granular as possible about the required skills and competencies helps you identify future roles that can be filled by promoting current employees, as well as what training programs you’ll need in order to ensure current employees can move into these anticipated roles.
Understand the state of play for current employees
For this part of the process, the more data the better. As you establish job leveling, it’s vital to understand pay inequities, attrition risk, and employee potential for advancement. The best way to do this is with thorough data analytics.
By examining HR metrics like compa ratio, time in role, length of tenure, and headcount per role, you’ll begin to spot trends surrounding those positions most at risk of attrition due to pay equity issues or career stagnation.
With this information, you can build an employee leveling program that helps improve employee retention and pay equity.
How to gather insights on the state of play
Your company probably already collects the raw data required for analyzing the state of play. But actually turning that data into actionable insights is another story.
A talent intelligence platform such as Praisidio gives you and your organization a valuable, data-driven window into the state of play across the entire company. Gain the actionable insights you need to create a solid, scalable employee leveling structure.
Create an employee leveling matrix
Once you have a solid understanding of the current state of play, use these insights to create an employee leveling matrix or matrices.
An employee leveling matrix is a communication tool. A clearly written employee leveling matrix makes it simple for employees to understand what they need to do to get promoted. It also communicates standards for advancement to company leadership and managers.
A good employee leveling matrix makes it easy for everyone involved to understand why someone was promoted and creates milestones for employees as they acquire new skills and work to advance in their careers.
Job leveling matrix example
Competencies don't have to be technical skills. Competencies can also be things such as analytical thinking, communication, and other non-technical or soft skills.
The responsibilities in each column give employees and leadership an understanding of the required responsibilities for each role. That way, it’s clear when employees are capable of shouldering the responsibilities of the next role in the job path or if an employee is already performing above their pay grade.
You can also create employee leveling matrices that show competencies and responsibilities required to move from one role to another, such as moving from being an engineer to being a manager, rather than advancing within a single role.
Most of the information for your job leveling matrix will come from the planning stage, where you identified the competencies and responsibilities you’d need for each role as your company grows. However, you may need to do some additional job grading of your existing roles to make sure you’ve covered all the bases for each role.
Implement and refine employee leveling structures
The last step is execution. This means distributing your employee leveling matrices and creating training opportunities for employees to acquire the skills and take on the responsibilities of future roles.
Additionally, get feedback from managers and employees to further refine your employee leveling program.
Rewrite your leveling matrix if people are not clear on the requirements of each role, and monitor your HR metrics to ensure that your at-risk employees are getting the boost they need to acquire skills and opportunities to advance.
Ultimately, an employee leveling program is an ongoing initiative, so be sure to take an active role in assessing and adjusting the program regularly.
Employee leveling the smart way
A successful employee leveling program makes your company more equitable, reduces employee attrition, and helps ensure your most critical roles are filled by your highest performers.
However, creating a successful employee leveling program requires a substantial understanding of your current workforce. You need to know the skill levels of employees, employee cohorts most in need of improved pay equity, and which role or teams are at most risk of attrition.
Praisidio uses talent intelligence to actively monitor HR metrics and turn those metrics into actionable insights for retaining employees and maximizing performance.
Praisidio clients typically reduce employee attrition costs by as much as $10 million for every 2,000 employees.
Book a demo to see how Praisidio can help your organization reduce attrition and improve employee experience at scale.