“Job Sizing – How to Calculate Equitable Pay ”
Small to medium enterprises (SMEs) make up approximately 97% of all businesses in New Zealand. With such a significant portion of the economy built on SMEs, many employers face unique challenges in ensuring fair and equitable pay. One common challenge is dealing with skilled-hybrid roles—positions that combine responsibilities from multiple areas of expertise. Traditional salary guides often focus on standard job descriptions, leaving employers unsure how to determine appropriate compensation for these complex roles. So, how do you accurately calculate pay rates for skilled-hybrid roles?
What is Job Sizing?
Job sizing is the process of evaluating a role's level of responsibility, skill requirements, complexity, and impact within an organisation to determine an appropriate and equitable salary. It involves analysing the various duties and skills associated with a role and assigning it a size or level that reflects its overall value to the business.
Example
Consider a role titled “Operations Coordinator,” which encompasses logistics management, team supervision, and customer service. Traditionally, each of these responsibilities might have different pay scales. Job sizing would involve assessing the combined responsibilities and skills required—perhaps it’s more akin to a managerial role due to supervision duties and strategic planning—leading to a fair, consolidated pay rate that reflects the total scope of work.
What is the Purpose of Job Sizing?
The primary goal is to establish fairness and consistency in employee compensation. It ensures that pay rates are based on the actual demands of the role, not just job titles or what similar roles pay elsewhere. Proper job sizing helps:
Promote internal pay equity
Improve employee satisfaction and retention
Attract skilled candidates by offering competitive yet fair wages
Support transparent pay practices and organisational fairness
What is the Process of Job Sizing?
The process typically involves the following steps:
Job analysis: Gather detailed information about the responsibilities, skills, and qualifications required for the role through job descriptions, interviews, or observation.
Identify key factors: Determine the core aspects such as complexity, decision-making authority, effort, and qualifications needed.
Assign a size or level: Use established frameworks or matrices—such as a point-factor system—to score each factor and arrive at a comprehensive size or grade.
Benchmark: Compare the role’s size with similar roles within the organisation or industry standards to ensure consistency.
Determine pay: Based on the role’s size and market information, set a pay rate that aligns with internal pay equity and competitiveness.
Why Do Companies Use Job Sizing?
Job sizing is a vital tool for employers committed to fairness and transparency. By systematically evaluating roles, companies can avoid arbitrary pay decisions, close pay gaps, and ensure that employees are fairly rewarded for their contributions. It also helps respond to legislative changes, such as New Zealand’s evolving pay equity laws, by providing a clear framework for assessing comparable roles.
What is the Impact of Job Sizing?
Implementing a robust job sizing process has tangible benefits:
Enhanced internal equity: Employees perceive their pay as fair and justified, reducing wage disputes and dissatisfaction.
Better talent management: Clear, consistent pay structures attract and retain skilled staff, particularly in hybrid roles.
Legal compliance: Proper job evaluation supports adherence to legislation around equal pay and pay equity.
Organisational fairness: Demonstrates a commitment to equitable pay, building trust and a positive workplace culture.
In conclusion, job sizing is an essential practice for many SMEs looking to establish fair and equitable pay structures, particularly when managing complex hybrid roles. By understanding the purpose and process of job sizing and applying systematic methods, employers can support a fairer, more transparent workplace that benefits both staff and the organisation.
References & Resources
New Zealand’s Pay Equity Legislation: Ministry of Business, Innovation & Employment
Job Evaluation Tools: NZ Employers & Industry Associations
For further guidance on implementing job evaluation or pay equity practices, contact EASI NZ or visit our resources page.