Employee Grade Placement

What employee grade placement is

Employee grade placement (تسكين الموظفين) is the act of putting each employee in the grade that fits them within the salary structure, and fixing their point within that grade’s pay range, once the levels of the jobs have been set. It is sometimes described as placing an employee in a pay grade, and the description covers both halves: the grade, and the position inside it.

Grade placement acts on people. The step that comes before it acts on jobs. That separation is the basis of everything else in the subject, because a fault in one step cannot be repaired by working on the other.

What comes before employee grade placement

Job evaluation (تقييم الوظائف) sets the relative value of each job inside the organisation, and its first rule is that it applies to the job regardless of who holds it. The experience and performance of the employee are addressed in grade placement and in pay within the range, not in setting the level of the job itself. The same rule appears in the account of job classification, one approach to job evaluation, which treats placing a job according to the person who holds it as one of the faults that invalidate the evaluation.

Employee grade placement is where the second half of that rule is applied. The job has supplied the grade, and placement decides where the person holding it stands within that grade’s pay range. An organisation that places people before it has evaluated its jobs is placing them on a scale that has not yet been built.

Employee grade placement and job classification are different operations

The word classification needs care here. In job evaluation, job classification names one of the approaches, and in that sense it means placing the job at a level defined in advance by written descriptions. Employee grade placement is a different act: placing the employee in a grade once the level of their job has already been set.

The two names are close, but the two operations are not. One orders the jobs, and the other puts people into what was ordered. For that reason the two terms should not be used interchangeably within one document, since a document that says the jobs were classified when it means that people were placed describes something other than what was done.

What an employee grade placement decision rests on

• Experience relevant to the role, not length of service in general. Years spent in other work are not years in this role.
• The level of mastery shown in the role today, measured by what is documented and not by impression.
• The position of others in the same grade. It matters because grade placement is relative by nature, and a single case examined in isolation cannot show whether it is consistent with the rest.
• The floor and ceiling of the grade. A placement outside the pay range is not a placement but an exception, and it needs a written rule and a named approver. Pay below the minimum of the grade is described as green circled pay, and pay above the maximum as red circled pay.

The width of the range sets how much room the first two of these, experience and mastery, have to work in. A narrow range leaves little distance between a new entrant and an experienced holder of the same job, and a wide one leaves more. That width is what range spread measures, and the entry point chosen at placement uses up part of it before any work has been done.

The compa ratio as a check on employee grade placement

The compa ratio (نسبة المقارنة الأجرية) compares an employee’s pay with the midpoint of their grade’s pay range, by dividing the first by the second. It is the most direct way to detect a grade placement that rests on no rule: two employees in the same grade with a gap between them that neither experience nor performance explains.

Take a grade whose range runs from SAR 8,000 to SAR 12,000, with a midpoint of SAR 10,000. Two employees in it have the same relevant experience and the same documented level of mastery. The first is paid SAR 9,000, a compa ratio of 0.90, and the second SAR 11,000, a compa ratio of 1.10. The gap between them is SAR 2,000, which is 22.2% of the lower wage, and nothing recorded about the two employees accounts for it. A gap of that kind is the signal a placement review looks for.

The compa ratio carries a limit that has to travel with it. It is worth nothing if the pay range itself is unsound, because it is then a precise measurement against a wrong reference, as when the range is out of date or was set by estimate. Suppose the midpoint of the same grade ought to stand at SAR 11,000. The first employee’s ratio becomes 0.82 and the second’s 1.00, while the SAR 2,000 between them stays where it was. The picture of where the two employees sit in the grade has changed, and neither employee’s pay has moved. So a review of employee grade placement begins by checking the scale before it checks the people. The figures in this example are assumed in order to show how the calculation works; they are not a benchmark and are not taken from any source.

What invalidates employee grade placement

• Placing by job title instead of the content of the job. A title can change while nothing underneath it changes, so a placement built on the title follows the label and not the work.
• Placing to justify existing pay. It means choosing for the employee whatever grade and point match what they are paid today, so that the scale becomes a description of the current situation rather than a correction of it.
• An unwritten rule. It leaves the placement looking like a personal decision, however sound that decision is, and with no defence when it is challenged.
• Stopping after the first round. Roles change and markets move, and a scale that is never reviewed becomes, after some years, a description of an organisation that used to exist.

Each of these can produce a placement that looks orderly on the day it is made. The fault shows later, when two people in the same grade ask why their pay differs and the only answer available is the history of how each of them was hired.

Employee grade placement and internal pay equity

Pay equity rests on the principle that every difference in pay has a reason connected to the work, one that can be stated and checked. Internal pay equity applies that principle inside one establishment, and employee grade placement is the point at which the reason is either created or lost. A decision based on a published rule produces a difference that can be explained. A decision based on the negotiation at hiring produces a difference that nobody can explain two years later.

The effect also reaches people who were never part of the decision. A new hire placed high in the range to close an offer can sit close to, or above, colleagues who have held the same job for years, and that narrowing of the gap between experience levels is what pay compression describes. The placement is one decision, but the question it raises belongs to everyone else in the grade.

What governs employee grade placement

Employee grade placement is a management practice, not a statutory procedure. In the sources we reviewed, we found no provision of the Saudi Labor Law (نظام العمل) that imposes a particular grade scale or a particular method of grade placement.

The unified model work regulation (النموذج الموحّد) annexed to the Implementing Regulation of the Labor Law (اللائحة التنفيذية) addresses the scale, but not placement. Paragraph (a) of Article 22 of the model work regulation provides that the establishment sets a job ladder for its jobs, stating the number and titles of the jobs in line with the Saudi occupational classification and description guide (دليل التصنيف والتوصيف المهني السعودي), the grade of each job, the conditions for holding it, and its starting wage. Neither that paragraph nor the promotion conditions in paragraph (b) of Article 22 of the model work regulation set how an employee is placed within a grade or where their pay sits within its range. The ladder gives each job a starting wage; it does not fix the point at which a particular employee is paid.

What governs that decision, then, is the rule the organisation writes down and commits itself to. A placement rule that is written, published to those who apply it, and applied to every case is what allows a placement to be explained, reviewed and, when the scale changes, repeated on the same basis.

Before an employee grade placement is approved

Three questions can be answered in writing before any placement is signed. Has the job been evaluated, so that the grade comes from the job and not from the person? Which documented facts about the employee justify the chosen point within the range? And where does that point leave the employee in relation to everyone else already in the grade? A placement that can answer all three carries its reason with it, and a placement that cannot will need one supplied later, from memory.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.

Related terms

• Job Classification
• Range Spread
• Internal Pay Equity
• Broadbanding
• Demotion