The basic premise of DBM is that the value of a job depends on its decision-making requirements. Decision-making is a logical and equitable basis for comparing jobs, because all jobs require the incumbents to make decisions of some kind while performing their jobs-whether they are line or staff, supervisory or nonsupervisory, union or nonunion.
An adequate job evaluation system is objective, equitable, and easy for all employees to understand. It applies to all categories of positions, is easy to maintain, and responds readily to the demands of the marketplace.
A compensation system is a sensitive matter; if overly complex, it will be expensive to maintain and difficult to understand. If your employees perceive it as unfair, you could be faced with excessive employee turnover, conflicts between unions and management, low morale, and potential litigation.
The checklist below will help you evaluate your current job evaluation system. If you say “yes” to any of these questions, you may be faced with potentially serious problems in your current system.
Job Evaluation Checklist
- Does your organization lack a formal job evaluation method?
- Is your organization experiencing difficulty in attracting and retaining competent employee?
- Is your organization using more than one job evaluation system for different groups of employees?
- Do employees perceive your job evaluation system and pay practices as unfair?
- Do unions perceive your current system as unfair?
- Are there disparities in pay between the same or similar jobs within your organization?
- Is your current job evaluation system unresponsive to the marketplace?
- Is your job evaluation system subjective and discriminatory?
- Is your current job evaluation method difficult to understand?
- Is your current system overly complex and costly to maintain?
A Description Of The Decision BandTM Method
Six Levels or Bands – The Decision Band™ Method distinguishes six levels of decision-making, or “Decision Bands”, ranging from the most far-reaching decisions on organizational goals to the simplest decisions, such as how fast to keypunch data. Decision Bands cover the entire spectrum of decisions that can be made in any organization. The six Bands are continuous, with each Band (except the top band) derived from the one above it. Thus A is derived from B, B from C, and so forth.
The decisions made in the upper three Bands (D, E, F) are “adaptive” decisions, since they have to do with adapting the organization to new circumstances. They can also be regarded as “planning” decisions. In the lower three Bands (A, B, C), the decisions are “instrumental” decisions, dealing with the actual carrying out of decisions made at Band D and above.
In the pages that follow, we describe each of the six Decision Bands, labeled F through A. It might be useful to read these descriptions in connection with Exhibit A, which illustrates how Decision Bands work in a typical organization.
Band F - Policy
These are decisions that determine the scope, the direction, and the overall goals of the whole enterprise. They are subject to few constraints other than those imposed by law and/or economic conditions, and they take into consideration all the major functions of the enterprise. Such decisions also set the goals of the major functions, the limits of the funds available to each, and the scope of their programs. Band F decisions are the kind typically made by the Board/Council or top executive level.
Band E - Programming
Band E decisions deal with the means of achieving the goals established at Band F. These decisions are concerned with formulating or adjusting programs for the major functions, specifying goals for the constituent functions of these major functions, and allocating resources (facilities, people, money, materials) among these constituent functions. The executives at Band E are typically in charge of or responsible for advising line executives heading up such major functions as marketing, administration, production, finance in private sector organizations, and major departments in public sector organizations.
Band D - Interpretive
At Band D, the decisions interpret and carry out the programs of Band E. These decisions specify what is to be done in lower Bands, and how the allocated resources are to be deployed. If circumstances change, or if there is uncertainty about information or outcome, a Band D decision is required to establish what is to be done in similar circumstances in the future. Band D decisions are typically made by middle managers in various functions.
Band C - Process
Decisions in Band C involve the means or process of achieving the ends established by Band D decisions. They are subject to the limits imposed by the available technology and resources, and to the constraints set by Band D. Selecting the process is a decision that must precede the carrying out of the operations that constitute the process. The process decision specifies what is to be done at Band B. These are typically decisions made by “professionals” and functional supervisors as defined by the Federal Government in the Fair Labor Standards Act.
Band B - Operational
These are decisions on the carrying out of the operations of a process specified by a Band C decision. There is, within the limits set by the specific process, a choice as to how the operations are carried out, but not as to what operations constitute the process.
Band A - Defined
Band A decisions are confined to the manner and speed of performing the elements of an operation. There is, within the limits set by the prescribed operation, a choice as to how the elements are performed, but not as to what elements constitute the operations.
Grading Within Decision Bands
Each of the Decision Bands is divided into two Grades, the higher Grade (except the lowest, Band A) being reserved for the coordination of “substantive” tasks that are performed by two or more persons whose jobs have been Banded at the same level. Further differentiation within Grades is made by a Subgrading process, which still uses factors related to decision-making. The typical number of Sub-grades is usually limited to 30. The DBM grading structure is set out in Exhibit B.
Each task of each job is Banded, and the task(s) that is (are) Banded highest establishes the overall Band of the job. Once this is completed, the jobs are assigned to one of the two Grades. Finally, each Graded job is assigned to a Sub-grade. This step-by-step refining process permits an organization to assign a job clearly and to justify the differences between various jobs, taking into account factors such as skill, effort, responsibility and working conditions.
The Implementation of DBM
The implementation of DBM involves three basic steps: Job Analysis, Job Grading, and Job Pricing. DBM is a highly task related method of valuing jobs.
Job Analysis is a critical component of this system. It must be thorough and accurate. The Job Analysis process begins by using questionnaires and personal interviews or expert/peer panels to gather information about the responsibilities of each position, the duties and/or tasks involved, and their relative frequency. Then job descriptions are prepared in a format that documents duties and responsibilities.
After a brief training period, employees in any organization can function as Job Analysts. Such an arrangement is highly desirable, since it saves on implementation costs. In addition, the experience the employees gain can be usefully applied in the future, when they administer the system.
Job Grading. This process of evaluating jobs is often performed by a Grading Committee that preferably consists of no more than six members.
Job Grading begins with a review of the job description that determines the level of decision-making necessary to perform each task. The tasks are Banded, then the job is Graded accordingly. This approach reflects one of the most unique and powerful features of DBM: Since each essential duty of the job is Banded and the job is Graded, the organization can actually review its overall structural effectiveness.
The Subgrading process uses the framework of decision-making to compare the difficulty and complexity of jobs. Subgrading is structured so that it provides flexibility for each organization to consider those factors most important to its unique environment. In recent years, organizations have developed dual career track classification and compensation systems. Such systems are designed to encourage employees to become more highly skilled and technically proficient, while diminishing the need to become a supervisor in order to progress or advance in one’s chosen profession. Examples include information technology positions that require ever increasing levels of skill. To accommodate dual track systems, additional sub-grades are utilized that parallel the sub-grades within the coordinating grade. Exhibit B shows this structure, and exhibit C shows the typical criteria that are used during the Subgrading process.
Job Analyst(s) normally attend the meetings of the Grading Committee so they can provide the information and explanations on which the Committee can base its judgments. Exhibit D shows the Banding and Grading of a sample job description. Our experience has shown that the DBM Job Grading process, including Subgrading, requires considerably less time and effort than Grading in other systems, such as factor comparison or point factor systems.
Job Pricing. These procedures are somewhat similar to those used in other evaluation methods, with certain significant exceptions. The DBM survey process is unique in that the whole process, from Job Analysis to Job Pricing, is an integrated approach. After the jobs have been Graded and Sub-graded, the Grading Committee can be transformed into a Pay Committee that decides on an appropriate pay structure, contingency pay, treatment of anomalies, and any other monetary matters. Pay policies should be consistent with the organization policies. When necessary, exceptions can be made on certain individual salaries. The Job Pricing process involves the following steps:
- Determine the appropriate pay curve for the organization. This includes the “spread” in pay ranges for the various grades and sub-grades, as well as the degree of overlap that may be required in pay ranges. Exhibit E is an example of an organization’s pay curve. Exhibit F illustrates the salary structure that is developed based on standard pay ranges. However, pay ranges can be structures to the requirements of any organization.
- Conducting a survey or reviewing published data, or both. This is for the purpose of gathering external pay data from comparable organizations. Exhibit G provides an example of surveyed organizations’ pay curves.
- Deciding on pay anomalies. This means identifying any jobs that appear to be paid too little or too much in relation to the new pay curve (or to the existing pay curve if it is not to be changed). Exhibit F also provides an example of how apparent anomalies can be identified. The next step is to make decisions about how to treat the salaries of the employees involved. Exhibit H presents a comparison of an organization’s pay curve to a composite pay curve of the surveyed organizations.
- Determining contingency pay-ments. This means additional pay (if any) that is provided for adverse working conditions and for certain jobs in which labor shortages exist.
DBM provides for more effective analysis of data than any other job evaluation method. Its major characteristic is that jobs are placed in salary grades only on the basis of the decision requirements of their duties. Factors that are unrelated to the work itself, such as working conditions or market demand for certain skills, are treated separately, and contingency payments are made in these unique situations. Because the system separates these payments from the basic pay structure, it is easy to make appropriate adjustments to various conditions while still maintaining equitable pay relationships.
Comparison of DBM And Other Systems
Over the years, a number of compensation systems have been developed, ranging in sophistication from the very simple to the rather complex. While the search for the “best” approach has accelerated in recent years, little progress has been made, and few truly fresh approaches have been taken. Thus, we find that today’s systems are generally the same ones we found years ago.
The following are the basic approaches to pay determination.
- Market Pricing. This system uses pay rates in the market as a standard, assuming that a position’s value is accurately defined by what other organizations are willing to pay.
- Whole Job Ranking. Jobs are compared with one another on the basis of a value judgment about each job’s difficulty and/or importance to the organization.
- Classification. Each job is rated against a predetermined ideal hierarchy, which has been developed for a single job family on the basis of several categories that define the difficulty of each job. Jobs are slotted into a classification on a “best-fit” basis.
- Factor Comparison. This compares all jobs on a sequential factor-by-factor basis, and derives a sum total score for each position.
- Point Factor. Each job is evaluated against a set of common elements or factors, which are broken down into degrees to which points have been assigned. Jobs are rated on each factor, and the point scores are totaled to yield an overall score.
- Scored Questionnaires. Incumbents complete a standardized questionnaire to identify the frequency and importance of their job responsibilities. Using multiple regression techniques the responses are scored and total points are assigned.
Each of the above approaches is either in place or is being implemented in organizations around the world; however, this should not be taken as an indication that these systems satisfy job evaluation system and/or legislative requirements. Job ranking and market pricing are techniques that the Equal Employment Opportunity Commission (EEOC) find lacks documentation and/or objectivity required for justification. Classification systems are more objectively based and provide better documentation, yet they lack a basis for making fine distinctions between jobs and within and across job families. In addition, they often rely upon arbitrary judgments. Finally, none of these three approaches provides the kind of information base that is useful for organizational analysis, manpower planning, recruiting, and training and development.
Factor comparison, point factor systems, and scored questionnaires are steps in the direction of greater objectivity. They also represent significant steps toward greater complexity in either the implementation or maintenance stages. Experience has shown that these approaches tend to be more difficult to implement and administer.
Quite frequently, employees find them hard to understand, and managements have found that considerable resources and effort are often required to maintain them. Considering what’s at stake, one might argue that the extra effort is worthwhile. Unfortunately, this is not necessarily the case. Experience shows that the results achieved by these systems do not differ markedly from those achieved by methods that are easier to develop and administer.
While broadbanding is not a job evaluation system, DBM lends itself naturally to broad banded environments. By using only the Band and Grades, or just the Bands, organizations can develop a broad band structure which is based on solid job evaluation techniques.
Experience has shown that the Decision Band™ Method is a highly effective method of job evaluation. Use of this method continues to grow as organizations become aware of its advantages.
By blending simplicity with technical sophistication, the Decision Band™ Method provides for accurate, fine-line distinctions among jobs without costing a lot of time, money, and effort. Since it is equally effective for all job levels, DBM helps to prevent problems that commonly arise when different plans are used for management than for clerical and hourly employees. It appeals to small and medium-sized organizations as well as to large, complex organizations.
The Decision Band™ Method can be used effectively for pay determination, and provides a powerful diagnostic tool as well. By focusing attention on a crucial element of a position’s impact—the level and nature of its decision-making authority—it can prove to be invaluable in uncovering significant inequities and weaknesses in an organization’s structure and decision making processes. In addition, it can serve as a solid foundation for developing performance appraisal, training, manpower, and succession planning programs. In summary, DBM is an easy and effective job evaluation system. Its strength lies in the fact that it is a relatively simple solution to a complex problem.
Example of an Organization's Current Pay Curve
The Organization's Current Internal Salary Structure
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