Keep Pay Structures Current Using This Job Leveling Methodology

January 17, 2019 Scott Allen

Companies that want to build or maintain competitive pay structures must have access to the right data and tools. But rapidly changing job roles in the era of digital disruption are prompting many companies to revisit their job evaluation system.

Using the right data, you should be able to identify values for different job levels that would enable you to stay competitive. Aon’s Total Compensation Measurement® (TCM) survey can be used to analyze pay data by job level and job family. Depending on your firm’s labor market and the composition of job families you have, you may see a significant difference in salaries across the job families. Aon’s JobLink™, our proprietary job evaluation methodology, is used across all of our TCM surveys and is designed to give you the internal consistency of each job's relative value. That means you can assign jobs to levels based on the actual nature of the work rather than a job title that may vary by individual companies or industries.

So rather than benchmarking pay by a position benchmark (for example, senior account), a JobLink™ level will allow you to compare any role with that level. The higher the level, the greater the scope and responsibility. Benchmarking by level can be especially effective when a traditional position-based benchmark isn’t available because of the uniqueness of the incumbent’s responsibilities or a lack of matches.

Roles are typically measured based on various factors, including: the knowledge necessary to adequately perform a role and how that knowledge needs to be applied; the degree of problem-solving and innovation required; the nature of interaction; the impact a role has on the organization; and the accountability the role holds.

To give you an idea of the type of analysis you can expect to see, let’s take a look at JobLink™ leveling in action as it pertains to annual base salary, target short-term incentives and target total cash compensation.

Benchmarking Roles by JobLink™ Level

The data tables below provide high-level results on the differences in pay across JobLink™ levels. The report is unique in that it allows you to benchmark roles by JobLink™ level while also taking into account industry, job family and revenue scope. It covers base salary, short-term incentives and target total cash compensation summarized at the 10th, 25th, 50th, 75th and 90th percentiles for all the levels.

Figure 1 shows the career levels using the JobLink™ methodology, focusing on exempt roles in job levels 2 to 9.

Figure 1

Career Levels Using JobLink™ Methodology

Annual Base Salary

As you may expect, Figure 2 shows that annual base salaries rise as the JobLink™ level increases. Notice the jump of approximately 12% (roughly $5,000) between each level from level 2 to level 4. Moving along, you will see a significant increase in median salary of approximately 33% between levels 4 and 5. Note that level 5 is the first level with no support roles. From levels 5 to 8, median salaries increase roughly 25% per level. However, at level 8 and 9, median salaries are relatively similar, with level 9 only 3% higher than level 8.

Figure 2

Change in Annual Base Salary as JobLink™ Level Increases 

Target Short-Term Incentives

For short-term incentives, we’re only looking at those eligible for a bonus with a short-term incentive target opportunity. Just 11% of level 2 incumbents are bonus eligible, and 25% of level 3 incumbents are eligible. Starting at level 3, which is also generally the first non-exempt level, the majority of incumbents become eligible for a bonus.

Among those with a short-term incentive target, the median is 5%. You can see how it hovers between 8% and 10% for levels 3 to 6, whereas target incentive opportunities begin to jump at level 7 and increase significantly up to 20% at level 9.

Figure 3

Change in Target Short-Term Incentives as JobLink™ Level Increases 

Target Total Cash Compensation

Target total cash compensation, the sum of base salary and target bonus, also reflects an increase in pay as level increases. Given the relatively low bonus eligibility at levels 2 and 3, you will notice that the median target total cash compensation levels are identical to the base salary levels. Moving higher to levels 4 and 5, the median target total cash levels are slightly higher than the base salary. The differences between levels 8 and 9 is also relatively modest (similar to the differences in base salary).

Figure 4

Change in Target Total Cash Compensation as JobLink™ Level Increases 

Next Steps

The 2018 TCM Broad-Based Exempt Total Compensation by Industry Level Wise Report is available to all participants of Aon’s TCM Broad-Based Management and Professional Survey. In addition to providing results using JobLink™ levels, participants will also have access to traditional position-based benchmarks.

See how Aon’s JobLink™ can help with your broad-based pay leveling needs. Please contact us now to learn more about JobLink™ and TCM.

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