Pay grades – how to make them work

Pay gradesASO4, APS2, PSO3…and countless other classifications are all around the world, denoting the different gradings that determine what someone is paid.  Government is a common spot where this is found, but in no way is government alone.

The concept itself is fine.  The original work of organisational scientist Elliott Jaques studied pay levels and the findings were clear that it was believed to be fair that those doing more complex work receive higher levels of pay..

So why is it the case that government departments have the reputation for bureaucracy, frustration and an inability to deliver?  A crucial reason is that pay grades become the number of levels of the management hierarchy.  And this is a problem because the number of managerial levels an organisation needs depends on the complexity of the organisation and it’s environment, not on the internal pay system.  And this complexity can be determined.

(See Organisational Design: What Your University Forgot To Teach You by Andrew Olivier)

Work exists in different levels, or as Elliott Jaques called them, ‘strata’, each with it’s own unique theme or particular value-add.  Having a manager who is doing the same level of work as you is inherently frustrating.  We’ve all experienced this when we’ve said my boss ‘breathes down my neck’, or the ubiquitous micromanager.   Less often but not uncommon is the manager two levels above in level of work, these are the ones with their ‘head in the clouds’.  Both situations are damaging.

So what do we do with pay grades?  In themselves, they are fine as more complex work deserves higher pay.  What is important is that each pay grade is assigned to a level of work so it is not automatic that a ‘Grade 2’ necessarily report to a ‘Grade 3’.  For example, Grades 1-3 could be denoted Stratum I, Grades 4-6 Stratum II, and the policy in place is that those in Grades 1-3 must have a manager in Grades 4-6.

Analysis is used to determine the current levels of work of each pay grade to ensure the above delineations occur at the right points.  When put into action this change can be a lightning rod that brings a frustrated organisation to life as unnecessary layers of management are removed.  The result is dramatically improved value-adding leadership and specialists relieved of managerial work they could feel was not adding any value.

And how does it feel?  Like the chains have come off.


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