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Hay Job Evaluation
Foundations and Applications
The Hay Method of Job Evaluation continues to be the most widely accepted worldwide, in use by over half of the world’s 50 largest companies as well as in government, public, and not-for-profit institutions. The process of evaluating jobs enables many important applications, such as designing effective organizations; clarifying interdependenciesand accountabilities; managing succession and talent; and setting competitive, value-based pay policies.

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Hay Job Evaluation
Foundations and Applications

Introduction Hay Job Evaluation: Foundations Hay Job Evaluation Factors Accountability Know-How Problem Solving So, Who Is Accountable? [sidebar] Legal Aspects of Hay Job Evaluation [sidebar] Hay Guide Charts ® JobSize and Shape Applications of Hay Job Evaluation Organizational Design and Analysis Step Differences Job Design and Analysis Job/Person Matching Succession Planning and Development Pay Structures and Grading The Job Evaluation Process Conclusion About Hay Group

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Copyright © 2005 Hay Group, Inc. All rights reserved.

Introduction

being passed bystart-ups with radically different business models. As a result, many organizations sacrificed disciplined processes that for years helped them control costs—especially pay-related costs. The even more challenging post-tech boom
To ensure a reasonable balance between flexibility and control, many organizations are revamping the process through which they value work.

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n the 1990s, the Internetand its parallel business boom fueled a war for talent, creating a belief that organizations either move at “e-speed” or risk

business environment, however, made those same organizations realize that any lost discipline meant higher costs, inconsistency, and a potential loss of defensible objectivity related to pay programs. To ensure a reasonable balance between flexibility and control, HayGroup is working with many organizations to revamp the processes through which those organizations value work. One key driver is the need to reestablish discipline within compensation programs, and to better align pay with value creation—particularly at executive levels. Beyond that our job evaluation processes help well beyond defining appropriate pay levels. Evaluating jobs not only providesconsistent work value measurement, it also gives organizations a common framework and language to design jobs, define career progressions, analyze organization structures, and more strategically manage human resources. This paper provides an overview of the Hay Guide Chart®-Profile Method of Job Evaluation and introduces a number of valuable applications. One key finding of our research with WorldatWorkand Loyola University of Chicago (of more than 1,200 organizations) indicates that between 82% and 96% of organizations evaluate jobs, but only 18% proactively maintain their systems. Moreover, a majority reports that they believe approximately 20% of jobs are incorrectly placed within the job grading structure. As a result, we believe there is significant untapped potential to leverage jobevaluation efforts to optimize organizational structures, develop people as key performers, and build employee commitment through reward programs that are fair, motivational, and competitive.

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So, Who Is Accountable?
A clear understanding of impact and its relation to overall accountability is critical when designing and evaluating jobs. Consider the case of a major hotelchain CEO, who ruled that the annual planning around “rack rates” for each property would be shared between the managers of national sales and operations. He reasoned that if he left it only to national sales, then the hotel managers would blame them if they did not achieve their goals. Likewise, if he delegated it just to the hotel managers, then national sales could blame the hotel managers if...