Public Servants / Public Service
By Jim Fox and Bruce Lawson, Fox Lawson & Associates, A Division of Gallagher Benefit Services, Inc.CompDoctorTM: Human beings are strange animals. When something happens that they do not like, members of the species will often look for another option. We all love to figure out ways to “beat the system.” In the case of classification and pay, when the pay door closes, there is a natural tendency to look for another door. In this case, that door is called classification. We have previously opined that this is one of the reasons public agencies have created the out-of-whack classification systems that they are currently trying to get back “into whack.” Having said that, here are a couple of things that you might want to consider doing.
As we have observed, when managers cannot reward their employees with pay increases, they will try other methods, often using the classification system as a reward. With limited new money available, this will lead to an increased pressure to reward employees.
Reclassification requests may begin to be approved without merit. This can start a chain-reaction of requests. Once one person is successful in obtaining a reclassification, other employees begin to question why they should not have their job reclassified. After all, they work just as hard, if not harder, than the employee who got their job reclassified. The result of all these reclassifications is that people frequently get placed in a job title that is not an accurate representation of the nature and level of work that they perform. Consequently, after a period of time, your classification system will be out of alignment. It no longer represents a classification of jobs, but an alignment of people. Even worse in this current economy is that payroll costs will no longer be controllable, since pay is usually increased with each approved request. In the long run, you may spend much of the money you attempted to save.
We recall a very large agency that was dealing with about 3,000 to 4,000 reclassification requests each year (about 300 to 400 per month). (Yes, you read that number correctly!) When we went back over all of the requests, we found that they had approved almost 97 percent of the requests.
We recall a very large agency that was dealing with about 3,000 to 4,000 reclassification requests each year (about 300 to 400 per month). (Yes, you read that number correctly!) When we went back over all of the requests, we found that they had approved almost 97 percent of the requests. Even though each request had multiple analysts review the request, they still granted nearly all that came their way. While they were able to control the two or more grade increase requests, each request took an average of three months’ time and those that were approved received an increase in pay. The bottom line is that the cost to review the requests is more than the cost of simply granting the requested reclassifications.
It should also be pointed out that this agency had more than 3,000 job classifications that made the system virtually unmanageable. With that many classifications, no one really had a comprehensive understanding of all the jobs. Thus, there was no real standard classification structure against which the analyst could compare and contrast the reclassification request. Since they had no “standard,” there was really no way to deny the requested reclassification.
While the best approach is to only approve requests with sufficient merit, HR professionals often bear the burden of intense pressure to approve job classification requests and pay adjustments. Our research in large government organizations shows that 60-70 percent of reclassification requests are approved, and with more salary attached. Usually the increase in pay for a successful reclassification is about five to 10
percent of salary. Now, let’s do the math: if only 50 percent of the reclassification requests are granted in a population of 1,500 employees, and about 10 percent of employees appeal their classification a year, this results in about 75 reclassifications granted each year. If the average compensation of those 75 employees is $38,000 (this is probably conservative), and each employee receives a minimum of a five percent increase in pay, the additional compensation cost (not including the staff time to submit and review the reclassification) is a minimum of $142,500 per year…forever!
What can you do? There are a couple of actions you can take to ensure the integrity of your classification system is maintained during this process. One thing is to request a budget justification for any classification or pay change. This forces managers into finding the money within their own budgets to pay for any pay adjustments.
A second option, which we have found to be effective, is to require that reclassification requests only be submitted if the job has changed by more than 30 percent of the duties and responsibilities. These new or changed responsibilities must also be accompanied by a change in the knowledge and skills required to perform the work.
A third option is to require that reclassification requests only be submitted during certain times of the year. This schedule may be every six months or every year. This type of schedule tends to force a waiting period such that it reduces the eventual need to submit a reclassification. This process usually eliminates the minor job changes that occur during the year, but does not really represent a job that has really changed substantially.
A fourth option would be for the organization to use an external source to review reclassification requests. An external review would focus on whether the reclassification was consistent with the organization’s adopted classification philosophy and strategy, assuming that one exists, and limit classification
changes to requests that had merit and were consistent with the philosophy. Requests that involve “reorganizations” or other issues that are not simply related to changes in the nature of the work performed could then be deferred to the annual budgetary review process. We have found that when reclassification requests are outsourced, the burden of proof becomes more difficult. This option might cost a little more today, but it may be cheaper in the long run, because your system will retain its integrity for a longer period of time. Besides, the outside party is not part of the social group that encompasses most work groups. In addition, the outside reviewer has only one obligation and that is to the client organization, so the old argument that “approving this reclassification is no big deal since it is not my money” simply won’t hold any water.
Finally, if the volume of reclassification requests just doesn’t subside regardless of what you have done, it might be a good idea to question whether your classification system is too narrowly defined for your organization. We have found that those organizations that have narrowly defined jobs (the ratio of job titles to employees is high such as one class for every three to five employees) tend to have more reclassification requests. With narrowly defined jobs, nearly any change to an employee’s job responsibilities will not be described in their current job description. Thus, a reclassification is needed to correct this inaccuracy. However, if the job is more broadly defined to include a job’s major roles and responsibilities in the organization, minor changes are usually already defined within the scope of the job.
Obviously, there are other approaches you can take besides the options outlined, but at least these should give you some ideas to start with. Good luck!