As global companies seek the benefits of scale, HR plays an important role in the design of organizations and the grading of jobs. But are the two activities connected? And if so, how?
Organization Design and Global Grading are interconnected elements within an end-to-end HR value delivery chain. In general, however, grading happens independently from organization design, as a company seeks to establish global compensation standards and structures while maintaining local flexibility in response to market, regulatory, and particular business needs. A typical process is to 1) size the business, 2) band the job, and 3) grade the job.
Organization design is the decision-making process that creates the larger system into which compensation fits. The Galbraith Star® organization design framework accounts for this at the Rewards point. The final design of the organization—the aligned choices of strategy, structure, process and governance—informs the design of the roles, which in turn informs the selection of grades for the various positions. This selection will be made in the context of the company’s job architecture and grading framework, in this case a global grading framework. In other words, organization design will tell us which jobs we need, and global grading will tell us how to grade and price them.
At a practical level, an HR organization should have sufficient internal connectivity that supports close, collaborative dialogue among its HR Business Partners, Organization Design and Development COE, and the Compensation COE. This will help ensure that designers work within the parameters of the compensation system, the compensation consultants work within the context of the given organization, and the HRBPs keep the pieces connected.
The organization design choice then determines which jobs are needed at which level. But, global grading is not in itself an organization design exercise. Such compensation frameworks are created to more efficiently and transparently manage jobs and pay (and pay mix) across boundaries and borders, facilitate global mobility of talent, and better administer global rewards and incentives. It becomes the foundation upon which jobs are evaluated, differentiated, and priced.
Tom Jasinski, Senior Consultant