“… Interesting thoughts by Brian Div, Booz & Company”-Mouaz

Strategy and Business By Booz&Company Most companies grade their employees’ jobs using some kind of ranking or rating system based on job evaluation. The grades assigned are intended to assess fair pay for people doing the same work, and are usually public, like the letter grades of schools. In theory, these systems are supposed to help people manage their careers, by providing a comparison of jobs and individuals’ competence across a large organization. But in practice, they have a terrible side effect: They end up adding to the costs of bureaucracy, frustrating employees, and undermining leadership development. The good news is that by changing this single factor in the human resources equation — replacing job grades with a system based on job accountability — companies can reverse many of their ill effects, reduce costs, and improve performance.

The problem is that job-grading systems at many companies migrated over time into the domain of organizational design. That’s because most companies base their job grades on a points system: Points are allocated for size of budget, sales, and number of subordinates. This gives managers a tremendous incentive to increase budget and staff — both for themselves and for everyone reporting to them. Since the easiest way to do this is often to insert another layer in the hierarchy, job grading ends up creating unnecessary and counterproductive layers of management.

Read this full article here.

Getting Rid of Grades to Boost Performance
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