The EU Pay Transparency Directive is giving HR teams across Europe plenty to think about. Salary structures, pay gap reporting, employee information requests… there's no shortage of things to get ready for.
But there's one part of the process that could turn into a much bigger headache than many companies are expecting: job grading.
Before you can compare the pay of employees doing work of equal value, you need to know which jobs are actually comparable. Sounds simple enough, right?
Well, not necessarily. You might discover that your job descriptions are outdated, your job catalogue is full of gaps, or your existing classifications aren't up to the task. And that's before you've chosen a grading methodology and got everyone to agree on how jobs should be evaluated.
Suddenly, one task on your pay transparency to-do list has become a major project, potentially holding up other parts of your preparations.
Why job grading matters for pay transparency
At its simplest, job grading is about working out the relative value of different jobs in your organisation. Rather than relying on job titles or hierarchy, you evaluate roles against a common set of criteria that you’ve agreed on and documented in advance.
This process is crucial for complying with the EU Pay Transparency Directive, which is built around the principle of equal pay for equal work or work of equal value.
In other words, it's not enough to compare accountants with accountants or software engineers with software engineers… you need to be looking at the value of every role. The results may surprise you: for example, two jobs in completely different departments might involve similar levels of responsibility, skills and effort, even if the day-to-day work looks nothing alike. Under the Directive, those roles could be considered “of equal value”.
To make those comparisons possible, the Directive requires employers to use objective, gender-neutral criteria, including skills, effort, responsibility and working conditions. It doesn’t prescribe a particular job grading method, though — we’ll get into that a bit later.
Broadly speaking, the grading process involves three steps:
- Map jobs: Identify roles and document their requirements
- Evaluate jobs: Assess roles using common, gender-neutral criteria
- Group and classify jobs: Organise roles by their evaluated value
Those evaluations also help you work out which employees belong in the same worker categories for pay transparency.
Grading doesn’t have to be the hard part. Learn how to build a fair, documented job structure in our free guide.
Read the job grading guideWhere grading projects get stuck
Job grading isn’t just a simple HR task. It’s a complex process that involves various stages and different stakeholders from across the organisation. Here are some of the biggest sticking points to look out for.
Missing or outdated job catalogues and descriptions
Before evaluating jobs, you need a clear picture of the roles in your organisation. For many companies, that's a bigger undertaking than it sounds.
Job descriptions might be years out of date, missing important responsibilities or too vague to be useful. Different departments may use different titles for essentially the same job. And some employees might have the same title even if their actual roles are quite different. Things get even more complicated if a company operates across several countries or has grown through acquisitions.
Grading needs to reflect the actual requirements of each role, not just what's written in an old job description or where a position sits on the organisation chart.
That means working with managers to understand what people really do, updating descriptions and defining roles consistently. It's not particularly glamorous work, and it can take time. But without it, you're building your grading framework on shaky foundations.
Can’t AI help with job grading?
Potentially, yes! AI tools can help draft and standardise job descriptions, identify missing information and even support initial job evaluations. That could save HR teams a fair amount of manual work.
But there's a catch: AI can miss important responsibilities, make incorrect assumptions about roles or reproduce existing biases. And an AI-generated evaluation is only as useful as the information and criteria behind it.
So AI could help speed things up, but you'll need people who understand the jobs to check the outputs and make the final decisions.
Choosing a methodology that works for your organisation
Once you've got a clear picture of your jobs, you need to decide how you're going to evaluate them. And there's no single right answer.
There are well-established grading methodologies available, including the Hay method from Korn Ferry and the Global Grading System from WTW. These proprietary systems offer tried-and-tested frameworks for evaluating jobs — but they come at a cost. They're not your only options, though: you could use an open-source framework or develop your own approach.
The challenge is finding a method that's robust enough for fair, consistent comparisons, but also practical for your organisation to use and explain.
It's a decision you really want to get right. Once you've evaluated hundreds or thousands of roles, changing methodology isn't simply switching frameworks. It can mean reassessing your entire job structure, with knock-on effects for salary bands, career progression and decisions employees have already come to rely on.
In fact, companies with an existing grading framework can sometimes have a harder time than those starting from scratch. They may need to revisit classifications that managers and employees have taken for granted for years.
That’s a lot of pressure — and it means many employers get stuck searching for the perfect approach. The important thing is to opt for a sound, objective approach that works for your organisation, rather than searching for a flawless methodology that doesn't exist.
“You’ve got to choose a way, and you’ve got to accept that your way is not going to be perfect.” — Iléana Wist, Compensation Expert at Figures
Getting managers and business leaders on board
Even with a good methodology, HR can't do all the grading work alone. You need input from people who understand the jobs being evaluated, and you need them to trust the process.
That's not always easy. Job grading can challenge long-held assumptions about which roles are more senior, demanding or valuable. For example, an HR manager and a financial controller might end up at the same grade because their roles require comparable levels of skill, responsibility and effort. That might make perfect sense according to your methodology, but not everyone will necessarily agree.
If managers feel their team's roles have been undervalued, you could end up spending more time defending individual evaluations than moving the project forward.
Involve business leaders early: get their input on job requirements, explain the evaluation criteria and agree how decisions will be reviewed and disagreements resolved.
After all, a grading framework is only useful if people across the organisation are prepared to apply it consistently.
“If managers and business leaders don’t understand or agree with your grading methodology, it’s going to be a constant fight.” — Iléana Wist, Compensation Expert at Figures
What happens when your grading isn't fit for purpose?
If your grading doesn't reflect the value of different jobs, you risk comparing the wrong employees — or missing important comparisons altogether.
For example, grouping people solely by job family and seniority might mean comparing HR managers only with other HR managers, overlooking equally valuable roles in Finance or Operations. But grouping jobs without properly evaluating their value can be just as misleading. And overly narrow categories may leave too few people for useful statistical analysis.
For the Directive's purposes, those categories must reflect objective, gender-neutral assessments of equal work or work of equal value.
Poor grading can affect several parts of your pay transparency preparations:
The goal isn't simply to produce the numbers required by the Directive. It's to make comparisons that help uncover pay inequalities your existing structures might have missed.
How to keep grading from holding up your pay transparency project
If your grading needs work, you don't necessarily have to put your whole pay transparency project on hold. Identify what needs fixing, what can happen in parallel and where you need business input.
Here are four things to focus on:
- Take stock of what you've already got
Start with your existing job catalogue, descriptions and grading framework, if you have one. Are they accurate and up to date? Are roles evaluated consistently across departments? Can you make meaningful comparisons between different job families?
You don't need to assume everything needs rebuilding. But you do need to know which parts of your current setup you can rely on.
- Tackle the biggest gaps first
Work out what's holding up progress: missing job descriptions, inconsistent classifications or an evaluation methodology nobody has agreed on.
Give those tasks clear owners and enough time in your project plan. Meanwhile, other work, such as preparing salary data or reviewing compensation policies, can move forward in parallel.
- Bring the business into the process early
Don't wait until you've graded every role to ask managers what they think. Involve them in defining job requirements, understanding the criteria and reviewing evaluations.
It's also worth agreeing upfront who makes the final decisions and how disagreements will be handled. That can save a lot of back-and-forth later.
- Choose a workable approach and document your decisions
Your methodology needs to be objective, gender-neutral and consistent, but also practical to use.
Document the criteria you use, how you apply them and the reasoning behind important decisions. You'll have a framework you can explain and apply consistently as roles evolve.
Get the foundations right before they become a problem
Job grading is an essential part of preparing for pay transparency. Without reliable job information, a consistent methodology and buy-in from the business, you risk delaying your preparations or missing the very pay inequalities the Directive is designed to uncover.
The sooner you get those foundations in place, the better. If you're ready to tackle your own grading project, Figures' comprehensive job grading guide walks you through the process, from choosing a methodology to evaluating roles and building a grading structure that works for your organisation.
Grading doesn’t have to be the hard part. Learn how to build a fair, documented job structure in our free guide.
Read the job grading guide
