The 12 Key Functions of Human

Resources
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Posted by Erik van Vulpen

HR has many important functions in the organization. These include recruitment,

performance management, learning and development, and many more. In this article,

we will explain the 12 key functions of HRM.

But first, a definition. If we want to understand the functions of Human Resources, we

need to understand what Human Resource Management (HRM) is.

According to Storey (1995), HRM is a distinctive approach to employment management

that seeks to achieve competitive advantage through the strategic deployment of a

highly committed and capable workforce, using an integrated array of cultural,

structural, and personnel techniques.

In this article, we will go over the 12 human resources functions and explain how they

help move the organization forward. These functions are:

1. Human resource planning

2. Recruitment and selection

3. Performance management

4. Learning and development

5. Career planning

6. Function evaluation

7. Rewards

8. Industrial relations

9. Employee participation and communication

10. Health and safety

11. Personal wellbeing

12. Administrative responsibilities

Let’s dive right in.

1. Human resource planning
The first HR function is all about knowing the future needs of the organization. What

kind of people does the organization need, and how many? Knowing this will shape

recruitment, selection, performance management, learning and development, and all

other human resources functions.

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Human resources planning is similar to workforce planning. Both focus on where the

organization is today and what it needs to be successful in the future.

2. Recruitment and selection
The second HR function involves attracting people to work for the organization and

selecting the best candidates.

Attracting people usually starts with an employee brand. Being an attractive employer

has plenty of advantages – just as it is the other way around. A good example of the

latter is the tobacco industry which struggles to attract talent due to its tainted

reputation.

With a strong employer brand and the right sourcing strategies, you’re already halfway

there. Once candidates apply, the selection process is an HR instrument to pick the

best qualified and highest-potential candidates. Technological developments in

recruitment have gone very fast and as a result, there are different types of recruitment

tools for each part of your recruitment funnel. 

3. Performance management
Performance management is essential in ensuring that workers stay productive and

engaged. Good performance management involves good leadership, clear goal-setting,

and open feedback.

Performance management tools include the (bi)annual performance review, in which the

employee is reviewed by his/her manager. It also includes 360-degree feedback tools in

which peers, managers, subordinates, and sometimes even customers review the
employee’s performance. These kinds of tools can be very helpful in providing

feedback.

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Performance management is also an instrument to close the gap between the workforce

you have today and the one you want to have tomorrow. One of the best ways to build

your future workforce is through learning and development (L&D).

4. Learning and development

Enabling employees to develop the skills they need for the future is an essential

responsibility for HR. This is also related to the first HR function we listed, in which HR

bridges the gap between the workforce today and the workforce needed in the near

future.

Traditionally, organizations have a set budget for learning and development. This

budget is then distributed among its employees. In some countries, this fee is

mandatory. In the UK, for example, companies with an annual pay bill of more than £3

million pay a mandatory rate of 0.5% designated for the professional education of their

employees.
In other countries, like Belgium and the Netherlands, L&D falls under the employer’s

responsibility to take care of its employees. In the third group of countries, like the US,

this is almost unregulated territory.

Despite the differences in regulation, almost all employers understand the value of

investing in the (future) skills of their employees. It’s the responsibility of the HR

department to lead these efforts in the right direction.

5. Career planning
The fifth function of Human Resource Management is career planning, guidance, and

development for employees, together also referred to as career pathing.

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Showing employees how their ambition can align with the future of the company helps

to engage and retain them. For the organization, there are the benefits of better

succession planning, higher productivity, and a stronger employer brand.

6. Function evaluation
As a business and society changes, so too must an efficient HR function. Function

evaluation is a technical aspect of HR. By evaluating the HR function, the department

ensures that the company is successful at both a strategic level and with service

delivery and support. The company needs to deliver the level of services required,

whilst operating strategically. 

Practically, function evaluation involves comparing various parts of the overall HR

operation. This can include the quality, and availability of workers, job location, working

times, the economic situation, job responsibilities, and how much value a job adds to
your organization. The idea behind function evaluation is that similar jobs should be

rewarded similarly.

There are different ways of internally ranking functions.

 Ranking method: a method in which subject matter experts rank functions in terms

of how much they contribute to the organization as a whole. Functions are paired and

raters have to decide which one is more valuable. This is done with all functions and

based on the outcome, a ranking is established.

 Classification method: jobs can also be classified in different categories using

classification methods. In this case, jobs are categorized and then ranked within

these categories to come up with a ranking. Categorizations can include education,

experience, the degree of specialized skills needed to do the job, the degree to which

these skills are in-demand, and so on.

 Points method: jobs are categorized according to the factors the organization

believes contribute most to its success. Points are then awarded to each category for

every job. These categories can include key competencies, like problem-solving,

technical knowledge, communication and influencing skills, innovative capability,

business acumen, and so on. These competencies will differ per organization

 Personal method: in this method, the job itself is not evaluated but the person doing

the job is. Here, employees are rewarded based on their skills and competencies.

7. Rewards
Rewarding employees for their work is a function that is impossible to

miss. Compensation and benefits are integral to attracting the right kind of candidate for

the role, and company. These will vary across different fields, countries, and cultures. In

some countries, such as the USA, health insurance is often part of a job offer. However,

in countries such as the UK, where a public health system provides most healthcare, to

most people, this is not the case. Yet the total rewards framework shows that rewards

are more than just money. They can also be relational and psychological outcomes.

Rewards include salary but also growth and career opportunities, status, recognition, a

good organizational culture, and a satisfying work-life balance. For example, fantastic

colleagues and meaningful work are also rewarding to employees. The monetary

reward of the job consists of financial rewards and other (secondary) benefits.

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The Employee Value Proposition (EVP) sums up all these aspects. The EVP of your

company is distinct from the external image and brand. It is the image a company

reflects to its employees. Rewards are thus much more than just financial. Here is a

non-exhaustive overview of total rewards:

 Base salary

 Performance-based-pay

 Bonuses

 Social environment

 Job security

 Status

 Alternating work

 Autonomy

 Growth opportunities

 Feedback

 Formal and informal development opportunities

Functions 1 to 7 all fall within the scope of what’s called talent management; they aim to

attract, develop, motivate and retain (high-performing) employees.

8. Industrial relations
Another function of HR is maintaining and cultivating relationships with labor unions and

other collectives, and their members.

Unionization is still prevalent in Europe, although it is declining overall. In 2018, 92% of

employees in Iceland were a member of a union and 67% of employees in Denmark.

However, in the UK and Estonia, only 23% and 4% of employees, respectively, were. In

the USA trade union membership is low, with 10% of employees being members in

2018. Maintaining good relations with unions will help to spot and resolve potential

conflicts quickly and will also be beneficial in more difficult economic times when layoffs

or other actions are required.

9. Employee participation and

communication
According to Dave Ulrich, one of the key roles of HR is to be a credible activist for the

employees. Employees need to be informed and heard on different topics that are

relevant to them. Communication relates to spreading information relevant to

employees.

Being a People’s Advocate is one of five elements of the T-shaped HR professional, a

new competency framework we developed for the future of the HR workforce. People

Advocacy includes culture building, people practices, workplace champion, and

communication expert. 

10. Health and safety

HR plays an important role in creating and implementing health and safety regulations.

Making these regulations part of the company culture is one of the main functions of

HR.

A famous example is oil company Shell where it is forbidden to walk the stairs without

holding the railing – also in the company’s HQ. This is part of Shell’s ‘Goal Zero’, which

stands for zero accidents. Although holding the railing is much more important on an oil

platform, safety is such a big part of the company culture that safety roles are applied

everywhere.

11. Personal wellbeing

HR has a function in assisting and taking care of employees when they run into

personal problems. Personal wellbeing is about supporting employees when things

don’t go as planned. Problems in the workplace and outside can negatively impact

employee performance, engagement, and productivity. This, in turn, harms a company’s

bottom line. 

Good personal well-being led by your HR department must work at the level of one-on-

one communication with employees, and communication across teams, and companies.

For example, a company may offer an employee assistance program by which anyone

with mental health issues, can access counseling. On an organization-wide level, the

company could hold a mental health awareness day.

12. Administrative responsibilities

The final function of HR is its administrative responsibility. These include personnel

procedures and Human Resource Information Systems.

Personnel procedures involve the handling of promotions, relocations, discipline,

performance improvement, illness, regulations, cultural and racial diversity, unwanted

intimacies, bullying, and so on.

For each of these situations, policies and procedures need to be developed and

followed to successfully comply with the requests, or overcome these challenges.

Human Resource Information Systems (HRIS) store employee data. These systems

need to be purchased, implemented and managed so the data can be used for better

decision-making.

Over to you
HR is a multi-faceted role that enables companies to get the most out of their workforce.

As an HR professional, you need to have a wide-ranging skill set to perform across

these core HR functions. Within HR, education cannot end with gaining your core

qualification. Society and the workplace are constantly changing and evolving. You too

must continuously develop, to lead your workforce confidently through change.

Job Classification: A
Practitioner’s Guide
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 3. Job Classification: A Practitioner’s Guide

Posted by Erik van Vulpen

Job classification forms the basis of many HR policies and personnel decisions. In this

article, we provide a practitioner’s guide to job classification. Specifically, we will explain

what job classification is, introduce a job classification system, and give some job

classification examples. 

Contents

What is job classification? A definition

Job classification system

Job classification examples

Job classification method

Job classification criticism

FAQ
What is job classification? A definition
Job classification is the process to determine the relative rank of different jobs in an

organization. This is important since the hierarchical position a job is classified as

underlies many HR decisions. A good job classification leads to fair, equitable, and

consistent compensation ensures that senior jobs have higher requirements in terms of

performance and capabilities, and enables succession planning to more senior roles.

A great example of a job classification is the army with ranks like private, corporal, and

general. A private has fewer responsibilities than a corporal or general, no discretionary

budget, and just following orders makes them good in their job. A general has more

responsibilities, has to think both tactically and strategically, and gets better pay to

compensate for their critical role.

Job classification is commonly used in large corporations, governmental institutions,

and other public services like universities. They are also commonly used in

organizations with very structured career paths, like accountancy or law firms. However,

when a company is above a certain size, a job classification structure is indispensable. 

Job classification is a specific method of job evaluation. The latter is a systematic

approach aimed at valuing a position. As you can see in the table below, job

classification is a qualitative way of evaluating the value of a job. Based on this ranking,

a grade system is attached to the job, which is often linked to a pay range.

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Job evaluation methods

Qualitative Quantitative

Ranking method/ pair comparison Factor-comparison

Job to job comparison
ranking method

Job to pre-determined grade

Job classification Point-factor method
comparison

It is hard to just cover job classification without covering the other methods in job

analysis as they are used interchangeably. 

Job classification system

As classification aims to create a well-defined comparison, it usually works with a

structure of job functions, families, and jobs.

Description Example

Group of jobs that involve similar work and require similar training, skills,
Job knowledge, and expertise. The family is based on function and not on
Finance
families organizational structure. Career progression is most often seen within the job
family.

Job Specific occupational area within a family. A job function is a category of Accounting
 function work that can be grouped based on similar characteristics or skills.

Jr. accountant
Sr. accountant
Collections of tasks, duties, and responsibilities as defined in the job Accounting
Job
description. manager
Accounting
director

A role describes the part played by an individual employee carrying out their Bill, Jr. accounta
Role
work. One job can have multiple roles. Jane, Jr. accounta

It is important to note that in job classification the job is evaluated, not the person. A job

can be held by multiple people at the same time, each with different nuances in their

roles.

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Every job is part of a job family, and every job family is part of a function. This way the

job classification makes intuitive sense and enables swift categorization of existing and

potential new jobs whenever relevant. As mentioned earlier, it also provides the

backbone of many HR policies.

Job classification examples

There are multiple ways to generate the different job functions and job families.

However, there are standardized ways to handle these.

When it comes to job families, common families include operations, marketing, sales,

human resources, finance, research and development, sales, customer support, shared

services, and so on. Depending on the activities within the family, the job functions are

defined.

In terms of specific job hierarchy, many organizations use a structure similar to the one

below:

Job steps Hierarchy Example job title

1 CEO, Managing director Chief Executive Officer

2 Other C-level executives Chief Operating Officer

3 President President manufacturing

4 Vice President (VP) Vice President HR

5 Director Director Consulting Services

6 Manager Sales manager

7 Team leader Technical Support Team Leader

8 Operator, associate, representative Customer success specialist

In addition to this ranking, there are various senior and junior positions. For example, a

junior director will rank differently from a senior director just like a senior VP will rank

higher than a normal VP.

Each job function has the same job families, as illustrated below. This illustration does

not include all jobs, as most organizations are shaped like a pyramid with fewer jobs at

the top and more at the bottom of the pyramid.

We wrote earlier that one of the goals of classification is to create an equitable pay

structure. The method above provides the basis for this. However, this does not mean

that an HR analyst will get the same pay as a financial analyst. This is also influenced

by supply and demand on the labor market, their respective responsibilities, and other

factors.

Job classification method

Now you know all the basics, the actual job classification method is straightforward.

Classification involves taking the characteristics of a job and categorizing it based on

the classifications we discussed before. The input is usually the job description, which

may already be available. Next, based on the job description, you can i) determine the

job family, ii) determine the job function, and iii) determine the job itself.

Once this is done, the job is classified and fit into a hierarchical structure as displayed

above.

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In the job classification, there is a pay grade associated with every job based on their

job description. This creates a relatively simple pay structure that is easy to explain.

Technically, the job wages are often based on a point factor rating, in which jobs are

assessed on i) required know-how, ii) problem-solving abilities, and iii) accountability.

This is also referred to as the point-factor method, which is one of the other job

evaluation methods.

Job classification criticism

There are some common criticisms on the system of job classification.

1. Activities that are in a higher class. Many roles have responsibilities that go above

their ‘class’. Take an employee who has over time taken up team lead responsibilities

without having the title. In a strict classification system, it will be impossible to

compensate this employee for the additional responsibility without promoting them

(which they may be ineligible for).

2. Position classification inhibits rapid progression. Job classification also inhibits

the rapid progression of talent. A friend of mine who is a world-class engineering

manager was unable to progress to a full management position because he would

have been the youngest manager in the firm’s history. In the meantime, he was the

firm’s most successful project manager and was managing the firm’s largest project,

with a total budget reserved only for senior managers. 

3. Standards are out of date. Many of the standards have been introduced in the ‘90s

and haven’t been revised. Job evaluation is a costly process and can take years.
 This means that changing responsibilities in job content are not implemented in the

system. Fun fact: in Russia, there used to be a communist classification system

dating from the USSR. After the USSR was dissolved, many companies kept using

that framework and many roles and classifications can be traced back to it. 

4. Inability to hire top talent. Organizations with extensive classification systems may

fail to attract specific and rare talent. Hiring cybersecurity experts or data scientists

into government is hard because of the competition in the private sector. Because

junior jobs in these roles are related to a pre-defined classification system with

corresponding pay it is hard to be competitive for these crucial workers.

5. Collective bargaining. While job classification from the employer’s perspective is

about categorizing job duties and paying a wage rate in relation to the profitability of

such jobs, from a union’s perspective classification is simply the duties an employee

performs and the pay they receive for them. This will lead to a system where the

compensation will be mid-heavy with limited possibilities to reward top talent and a

small number of entry-level jobs, invalidating the reason why the employer started

with job classification in the first place.

Despite these drawbacks, job classification does provide a standardized framework and

a relatively straightforward career path for most normal workers. It also prevents the

employee from negotiating a salary that goes beyond their value to the organization.

With that, job classification may be the least bad way to structure compensation. 

FAQ
What is job classification?
Job classification is the process to determine the relative rank of different jobs in

an organization. This is important as the hierarchical position a job is classified

as underlies many HR decisions.

What is an example of a job classification?

A great example of a job classification is the army with ranks like private,

corporal, and general.

What are drawbacks of the job classification system?

Drawbacks of job classification include the fact that the standards are out of date,

that it can make it impossible for organizations to hire specific and rare talent,

and that it can prevent a rapid progression of talent.

Job Analysis: A Practitioner’s

Guide
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3. Job Analysis: A Practitioner’s Guide

Posted by Erik van Vulpen

Job analysis is a common technique aimed at providing detailed information on a

worker’s job. A job analysis can help draft a better job description, lead to a safer work

environment, help in workforce planning, and is key in performance management.

Because it touches so many key HR functions, this article will provide a practitioner’s

guide with a full 5-step template on how to conduct a job analysis. We’ll also include

multiple job analysis examples throughout the article. Happy reading! 

Contents

What is job analysis? A definition

The purpose of a job analysis

Job Analysis Methods

– Critical Incident Technique (CIT)

– Task inventory (TI)

– Functional job analysis (FJA)

How to conduct a job analysis: A Template

Conclusion

FAQ

What is job analysis? A definition

Anyone with some work experience has at some point done a job analysis. This can be

a manager who decides to combine two vacant roles into one job, a recruiter who tries

to create a job description or an employee who lists their main tasks to create a

personal development plan.

Although these job analyses will have different levels of detail, the process is similar.

When we define it, a job analysis is a systematic process in which a job is broken into

smaller units which are then analyzed to describe what is done in the job, or what

capabilities are needed to do the job.

A job analysis is conducted by employees themselves, managers, OD professionals, or

HR professionals for various purposes. When doing so, there are three primary types of

job analysis data, namely work activities, worker attributes, and work context.

In this article, we will focus mostly on work activities. The work activities form the basis

for determining the worker attributes, together with the organizational culture. We will

focus less on the work context – but do keep this in mind in your job analysis, especially

when this context is subject to change.

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The purpose of a job analysis
The goals of a job analysis can vary but most of them are in the HR domain. In general,

the following purposes can be distinguished (Morgeson, Brannick & Levine, 2020).

Job analysis
Description
purpose

The job analysis provides input for the job description. The job description is an internal
Job description document that specifies the requirements for a new position, including the required skills, ro
in the team, personality, and capabilities of a suitable candidate.

Job Job classification is the process of placing one or more jobs into a cluster or family of simil
classification jobs. The goal is to set pay rates and selecting employees.

Job evaluation is the process of determining the relative rank of different jobs in an
Job evaluation
organization. The purpose is to create pay transparency and equity.

Job design is the process of creating a job that adds value to the company and is motivating
Job design
the employee.

Personnel Here the job analysis provides information for the minimum qualifications (or requirements
requirements of roles in the organization, often used for recruiting purposes.

Performance The job analysis provides input for the performance appraisal of the individual performing
appraisal job.

Job analysis forms the basis of the training needs analysis. Once knowledge, skills, abilities
Worker training and other characteristics are identified, the training need can be identified and employees ca
be trained.

People and jobs should fit together. Job analysis is useful to identify the knowledge, skills,
Worker
abilities, and other characteristics required for a role, which can then be matched with an
mobility
internal hire.

Job analysis can be used to improve efficiency at work by analyzing activities and optimizi
Efficiency
the way they are conducted by people in the role.

Job analysis can identify hazardous behaviors and working conditions that increase the
Health & safety
chance of accidents and injury, leading to a safer working environment.

To plan for the workforce of the future, knowledge, skills, abilities, and other characteristic
Workforce
need to be identified and matched with future demands for work. This enables the creation
planning
a strategic workforce plan for a role or department.
 Federal and national law can apply to working conditions, health, hiring, training, pay,
Legal
promotion, and firing employees. Job analysis can be a tool to ensure all activities in a role
requirements
comply with the regulation.

Job analysis is great at identifying the knowledge, skills, abilities, and other

characteristics required to do a job. To identify these, the job is broken down into

smaller units of work. These include duties, tasks, activities, and elements (again based

on Morgeson, Brannick & Levine, 2020).

Unit Description Example

Job A collection of similar positions. ‘Receptionist’

A set of duties, tasks, activities, and elements to be Melinda, the receptionist who
Position
performed by a single worker. mostly works night-shifts

Collections of tasks directed at general job goals. A

Duty Hospitality activities for visitors
typical job has 5 to 12 duties.

Collections of activities with a clear beginning, Welcoming guests and guiding

Tasks
middle, and end. A job has 30 to 100 tasks. them to the waiting room

Clusters of elements directed at fulfilling work Pushing the intercom button to

Activity
requirements. open the door

Elemen
Smallest identifiable unit of work. Answering the phone
t

Based on the description of these smaller units of work, the building blocks of a job are

identified. There are multiple different methods to approach this. That’s what we will

cover in the next section.

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Job Analysis Methods

There are multiple different, commonly-used job analysis methods. These include the:

 Threshold Traits Analysis

 Ability Requirements Scales

 Position Analysis Questionnaire

 Critical Incident Technique

 Task inventory

 Functional Job Analysis and;

 Job Elements Method.

Explaining all job analysis methods would go beyond the scope of this article. We will

focus on the three best-known and most effective job analysis methods, which are the

Critical Incident Technique, Task Inventory, and Functional Job Analysis.

 Effectiveness ratings per
job analysis method on a 5-point scale (source)

Critical Incident Technique (CIT)

The critical incident technique relies on observed critical incidents. Critical incidents

are behaviors that represent either outstanding or unacceptable performance. A typical

critical incident report has the following elements:

1. A description of the context and circumstances leading up to the incident.

2. The behaviors of the employee(s) during the incident.

3. The consequences of the behaviors and their broader impact.

The critical incident technique is most effective for health and safety incidents (e.g.,

whenever an accident, injury, or death occurs), performance appraisals, and worker

training. In the last two cases, the critical incident lists examples of exemplary and
unacceptable behavior, which can be used to provide feedback to an employee or as

the basis for training what employees should and shouldn’t do.

Task inventory (TI) (task analysis)

The task inventory, or task analysis, is an inventory of all the tasks that a job consists of.

These tasks are often grouped under their duties. Earlier we mentioned that a job has

between five to twelve duties and up to 100 tasks. For each of the tasks, their frequency

of performing the task, task importance, and associated difficulty may be indicated.

HOSPITALITY DUTY FOR A RECEPTIONIST

Tasks Freq. Import. Difficulty

Answering the intercom when the doorbell rings 300/day Medium Low

Welcoming guests and guiding them to the waiting 120/day Medium Low
room

Providing guests with a drink 80/day Low Low

Answering questions from visitors 30/day High Medium

Managing expectations about waiting times 30/day Medium High

Receiving and handling complaints 6/day High Very high

The table above shows an example of one of the duties of the receptionist at a doctor’s

office. Other duties may include managing appointments, administration, and answering

basic medical questions.

The task inventory is often created based on input from expert panels, the people

working in the job themselves, and their managers. The task inventory is most effective
for creating job descriptions, job classifications, worker training and to check compliance

with legal requirements

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Functional job analysis (FJA)

The functional job analysis is a method of job analysis developed by the United States

Department of Labor (DOL). The functional job analysis provides specific information to

what work needs to be performed and the worker qualifications required to successfully

do the work.

The FJA focuses on tasks, not on what gets done. This is because people are more

likely to agree about the activity involved. An airline lounge receptionist may be required

to ‘make guests feel welcome’ but there are many ways to achieve this objective. The

table below describes an airline lounge receptionist according to the DOL’s Dictionary of

Occupational Titles.

Receptionist, Airline Lounge

Admits members and guests to airline lounge, serves beverages and snacks, and provides other personal service
as requested: Opens door to lounge in response to sound of buzzer, verifies membership cards, and admits and
seats members and guests. Serves refreshments such as cocktails, coffee and snacks. Answers questions regardin
scheduled flights and terminal facilities. Verifies passengers’ reservations. Directs or accompanies passengers to
departure gates, rest rooms and other terminal facilities. Relays requests for paging service, using telephone.
Opens cans, bottles, and packages; brews coffee; and arranges pastry, nuts, and appetizers on serving trays.
Removes used ash trays, glasses, and dishes from tables and picks up trash.

We will cover the functional job analysis in more detail in a later article.

How to conduct a job analysis: A 5-step

Template (example)
Now that we’ve covered the most important theory, we will share an example analysis

which can be used as a job analysis template. This template contains five steps and we

will cover each step. 

Do realize that this is a thorough process template. If you conduct a simple and quick

job analysis by speaking to one or two people on the job, the process will be much more

expedite (at the cost of reliability). However, this may already provide sufficient

information to draft, for example, a job description.

1. The job analysis purpose

The starting point of any job analysis is its purpose. Why do we want to do an analysis?

The purpose of the analysis influences most of the job analysis design choices,

including its budget, project lead, and stakeholders.

The purposes of a job analysis were listed earlier and can include the creation of a

robust job description, a needs analysis for worker training, or workforce planning.

As an example, a job analysis conducted for strategic workforce planning purposes, will

involve more senior stakeholders, more budget, and take more time compared to a job

analysis conducted to create a simple job description. 

In the former case, the sponsor is most likely a Senior Vice-President or other

department head who wants to assess if the current talent will be able to do the job in

five years. In the latter case, the sponsor is more likely a hiring manager who, after

having a bad hire, really wants to pinpoint the profile of the person they are hiring for.

The purpose will thus influence the further scope, budget, and also the team, team

leader, and the degree to which external parties, like consultancies, are involved.

2. The job analysis method

Based on the purpose, the most appropriate job analysis method is selected. The three

most commonly used methods are the Critical Incident Technique, Task Inventory, and

Functional Job Analysis. Depending on the method, the data collection will differ.

We recommend using the table we showed earlier in the article to determine the most

effective job analysis technique and use that to influence future actions.

3. Gathering data

Data gathering and data analysis are the two most time-consuming steps in this job

analysis template. Depending on the job analysis purpose, the job analyst may prefer

different data gathering methods. Data analysis includes observational data, interviews,

and questionnaires.

The Critical Incident Technique focuses on structurally collected incident data through

interviews and observational data from the people involved in the incident. The Task

Inventory focuses on listing the different duties and tasks performed in the job, which

can be done either through observational data, interviews, or structured questionnaires.

The focus here is the creation of a list of tasks, time spent on these tasks, and the

importance or difficulty of the task.

Data gathering
Description
method

Observational data is the most neutral form of data collection as it (supposedly) does not
interrupt normal performance. The job analyst observes the person doing the job, either in re
Observational
life or on video. Observational data can describe activities based on the chosen unit of analy
data
(see the Table above). Mere observation can already influence the way individuals conduct
job, a well-known example being the Hawthorne effect.

Interview Interviews serve as another key way to gather data, which can be used in combination with
 observational data. Based on observational data, specific questions are asked. Interviews
should be well-prepared and carefully conducted. Here again, the interviewer can focus on t
different units of analysis to identify duties, tasks, activities, and work elements.

The third way to gather data is through questionnaires. These can be self-designed or off-the
Questionnaires shelf, with the best-known example being the Position Analysis Questionnaire (PAQ), whic
can be administered by a job analyst.

4. Analysis

The time spent on analysis depends on the data collected. When large amounts of

quantitative data are collected, it is useful to report mean scores, standard deviations,

number of participants, and the standard error of the mean (SEM). The latter is relevant

as a measure for the reliability or precision of the results. A high SEM value for a

specific task may lead to additional research.

In the example below, we can see that there is consensus among participants about the

first four tasks but there is a low mean score about expectation management for visitor

waiting time. This may indicate that this is not seen as part of the core role. Maybe only

more senior professionals do this or it is not seen as part of the core job (so it may be

qualified as extra-role behavior). 

Task for Receptionist M SD N SEM

1. Answering the intercom 4.3 0.5 49 0.1

2. Welcoming guests and seating them 4.0 0.6 48 0.1

3. Providing refreshments to guests 3.7 1.2 20 0.3

4. Answering questions from visitors 3.2 1.6 32 0.3

5. Managing expectations about visitor waiting time 2.5 2 12 0.6

Morgeson and colleagues list a number of other more analytical measures, including

inter-judge agreement, interjudge reliability, and internal consistency as ways to assess

reliability, and correlation and regression, factor and cluster analysis, and other

multivariate techniques to measure validity.

5. Impact

An essential last step is the realization of the intended impact of the job analysis. This is

referred to as consequential validity, which is the degree to which the job analysis

impacts the interventions that are derived from it.

In other words, does the job analysis lead to a tangible impact on Human Resource

Management? This is hard to assess but crucial when it comes to making the job

analysis design choices for the next time around. 

If a quick interview with two receptionists yields almost the same quality job description

as a structured study of all thirty, the former approach is much more cost-efficient than

the latter. Not only because it saves the job analyst time but also because it saves the

receptionists hours and hours which they can spend on answering the intercom and

welcoming guests instead.

Conclusion
This also brings us to the final point of this article. Job analysis is a brilliant and well-

tested technique that has a clear place in human resource management. Indeed, a

good application of job analysis will impact business outcomes.

For example, a thorough job analysis will lead to a better job description, which leads to

a better hiring decision and eventually to higher on-the-job performance. It will also lead

to a more accurate training needs analysis, which, in turn, will lead to better formal

training and, as a result, higher on-the-job performance. It will also lead to a more

precise way to give performance management feedback, leading in turn to better

performance.

Job analysis is, however, also a very time-intensive technique. Conducting a detailed

job analysis will involve filling in questionnaires or interviewing up to tens of people,

making it a very costly endeavor. The question that should always be asked is to what

extent a full job analysis is worth it, also taking into account the rapidly changing nature

of work – although this may at the same time be a reason to do the job analysis in the

first place.

In conclusion, it is good to master the essentials of the job analysis as everyone will use

the techniques described in this article to some degree. Whether you are a manager,

HR professional, or an employee, having a good understanding of the job will lead to

better and more strategic decisions in the job, on the job, or about the job.

FAQ
What is job analysis?
Job analysis is a systematic process in which a job is broken into smaller units

(like tasks and activities) which are then analyzed to describe what is done in the

job or what capabilities are needed to do the job.

What are the objectives of job analysis?

The objective is to get a deeper understanding of the job, in order to (among

other things) create a job description, job design, performance appraisal, worker

training, workforce planning, or to make the job safer.

How to conduct a job analysis?

A job analysis is conducted by defining its purpose, selecting the job analysis

method, gathering and analyzing data and implementing the findings to have an

impact on your human resource management policies.

Why is job analysis important?

A job analysis enables better human resource decisions. For example, a thorough

job analysis will lead to a better job description, which leads to a better hiring

decision and higher on-the-job performance as a consequence. It will also lead to

a more precise way to give performance management feedback, leading in turn to

better performance – and so on.

What are benefits of job analysis?

A job analysis creates a deep understanding of all tasks and activities involved in

doing the job. This is helpful for many HR processes, including the creation of a

job description, training needs analysis, to make the job safer, or to optimize the

time spent on the job. 

What are the disadvantages of job analysis?

The main disadvantage of job analysis is the time involved in doing a thorough

analysis. Such an analysis can take hours for both the job analyst and for the

people in the job.

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Job Classification: A
Practitioner’s Guide
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2. Articles
3. Job Classification: A Practitioner’s Guide

Posted by Erik van Vulpen


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Job classification forms the basis of many HR policies and personnel decisions. In this

article, we provide a practitioner’s guide to job classification. Specifically, we will explain

what job classification is, introduce a job classification system, and give some job

classification examples. 

Contents

What is job classification? A definition

Job classification system

Job classification examples

Job classification method

Job classification criticism

FAQ

What is job classification? A definition

Job classification is the process to determine the relative rank of different jobs in an

organization. This is important since the hierarchical position a job is classified as

underlies many HR decisions. A good job classification leads to fair, equitable, and

consistent compensation ensures that senior jobs have higher requirements in terms of

performance and capabilities, and enables succession planning to more senior roles.

A great example of a job classification is the army with ranks like private, corporal, and

general. A private has fewer responsibilities than a corporal or general, no discretionary

budget, and just following orders makes them good in their job. A general has more

responsibilities, has to think both tactically and strategically, and gets better pay to

compensate for their critical role.

Job classification is commonly used in large corporations, governmental institutions,

and other public services like universities. They are also commonly used in

organizations with very structured career paths, like accountancy or law firms. However,

when a company is above a certain size, a job classification structure is indispensable. 

Job classification is a specific method of job evaluation. The latter is a systematic

approach aimed at valuing a position. As you can see in the table below, job

classification is a qualitative way of evaluating the value of a job. Based on this ranking,

a grade system is attached to the job, which is often linked to a pay range.

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Job evaluation methods

Qualitative Quantitative

Ranking method/ pair comparison Factor-comparison

Job to job comparison
ranking method

Job to pre-determined grade Job classification Point-factor method

 comparison

It is hard to just cover job classification without covering the other methods in job

analysis as they are used interchangeably. 

Job classification system

As classification aims to create a well-defined comparison, it usually works with a

structure of job functions, families, and jobs.

Description Example

Group of jobs that involve similar work and require similar training, skills,
Job knowledge, and expertise. The family is based on function and not on
Finance
families organizational structure. Career progression is most often seen within the job
family.

Job Specific occupational area within a family. A job function is a category of

Accounting
function work that can be grouped based on similar characteristics or skills.

Jr. accountant
Sr. accountant
Collections of tasks, duties, and responsibilities as defined in the job Accounting
Job
description. manager
Accounting
director

A role describes the part played by an individual employee carrying out their Bill, Jr. accounta
Role
work. One job can have multiple roles. Jane, Jr. accounta

It is important to note that in job classification the job is evaluated, not the person. A job

can be held by multiple people at the same time, each with different nuances in their

roles.

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Every job is part of a job family, and every job family is part of a function. This way the

job classification makes intuitive sense and enables swift categorization of existing and

potential new jobs whenever relevant. As mentioned earlier, it also provides the

backbone of many HR policies.

Job classification examples

There are multiple ways to generate the different job functions and job families.

However, there are standardized ways to handle these.

When it comes to job families, common families include operations, marketing, sales,

human resources, finance, research and development, sales, customer support, shared

services, and so on. Depending on the activities within the family, the job functions are

defined.

In terms of specific job hierarchy, many organizations use a structure similar to the one

below:

Job steps Hierarchy Example job title

1 CEO, Managing director Chief Executive Officer

2 Other C-level executives Chief Operating Officer

3 President President manufacturing

 4 Vice President (VP) Vice President HR

5 Director Director Consulting Services

6 Manager Sales manager

7 Team leader Technical Support Team Leader

8 Operator, associate, representative Customer success specialist

In addition to this ranking, there are various senior and junior positions. For example, a

junior director will rank differently from a senior director just like a senior VP will rank

higher than a normal VP.

Each job function has the same job families, as illustrated below. This illustration does

not include all jobs, as most organizations are shaped like a pyramid with fewer jobs at

the top and more at the bottom of the pyramid.

We wrote earlier that one of the goals of classification is to create an equitable pay

structure. The method above provides the basis for this. However, this does not mean

that an HR analyst will get the same pay as a financial analyst. This is also influenced

by supply and demand on the labor market, their respective responsibilities, and other

factors.

Job classification method

Now you know all the basics, the actual job classification method is straightforward.

Classification involves taking the characteristics of a job and categorizing it based on

the classifications we discussed before. The input is usually the job description, which
may already be available. Next, based on the job description, you can i) determine the

job family, ii) determine the job function, and iii) determine the job itself.

Once this is done, the job is classified and fit into a hierarchical structure as displayed

above.

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In the job classification, there is a pay grade associated with every job based on their

job description. This creates a relatively simple pay structure that is easy to explain.

Technically, the job wages are often based on a point factor rating, in which jobs are

assessed on i) required know-how, ii) problem-solving abilities, and iii) accountability.

This is also referred to as the point-factor method, which is one of the other job

evaluation methods.

Job classification criticism

There are some common criticisms on the system of job classification.

1. Activities that are in a higher class. Many roles have responsibilities that go above

their ‘class’. Take an employee who has over time taken up team lead responsibilities

without having the title. In a strict classification system, it will be impossible to

compensate this employee for the additional responsibility without promoting them

(which they may be ineligible for).

2. Position classification inhibits rapid progression. Job classification also inhibits

the rapid progression of talent. A friend of mine who is a world-class engineering

manager was unable to progress to a full management position because he would

have been the youngest manager in the firm’s history. In the meantime, he was the

firm’s most successful project manager and was managing the firm’s largest project,

with a total budget reserved only for senior managers. 

3. Standards are out of date. Many of the standards have been introduced in the ‘90s

and haven’t been revised. Job evaluation is a costly process and can take years.

This means that changing responsibilities in job content are not implemented in the

system. Fun fact: in Russia, there used to be a communist classification system

dating from the USSR. After the USSR was dissolved, many companies kept using

that framework and many roles and classifications can be traced back to it. 
4. Inability to hire top talent. Organizations with extensive classification systems may

fail to attract specific and rare talent. Hiring cybersecurity experts or data scientists

into government is hard because of the competition in the private sector. Because

junior jobs in these roles are related to a pre-defined classification system with

corresponding pay it is hard to be competitive for these crucial workers.

5. Collective bargaining. While job classification from the employer’s perspective is

about categorizing job duties and paying a wage rate in relation to the profitability of

such jobs, from a union’s perspective classification is simply the duties an employee

performs and the pay they receive for them. This will lead to a system where the

compensation will be mid-heavy with limited possibilities to reward top talent and a

small number of entry-level jobs, invalidating the reason why the employer started

with job classification in the first place.

Despite these drawbacks, job classification does provide a standardized framework and

a relatively straightforward career path for most normal workers. It also prevents the

employee from negotiating a salary that goes beyond their value to the organization.

With that, job classification may be the least bad way to structure compensation. 

FAQ
What is job classification?
Job classification is the process to determine the relative rank of different jobs in

an organization. This is important as the hierarchical position a job is classified

as underlies many HR decisions.

What is an example of a job classification?
A great example of a job classification is the army with ranks like private,

corporal, and general.

What are drawbacks of the job classification system?

Drawbacks of job classification include the fact that the standards are out of date,

that it can make it impossible for organizations to hire specific and rare talent,

and that it can prevent a rapid progression of talent.

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Future-proof your career in HR by continuously expanding your skill set with the latest and most
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Browse courses

Erik van Vulpen

Erik van Vulpen is an expert in shaping modern HR practices by bringing technological

innovations into the HR context. He receives global recognition as an HR thought leader

and regularly speaks on topics like HR Analytics, Digital HR, and the Future of Work. In his

passion to share his ideas, he founded AIHR, the Academy to Innovate HR in 2016. Which

has since become the #1 leader in online training courses for HR professionals across the

globe. Connect with Erik on LinkedIn and discover AIHR's curriculum here.

A Full Guide to Job Evaluation

for HR
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2. Articles
3. A Full Guide to Job…

Posted by Erik van Vulpen

Job evaluation is a complicated but important process in achieving pay equality. In this

article, we will explain what job evaluation is, discuss the four key methods of job

evaluation, and we will take you through the full job evaluation process. Let’s dive in!

Contents

What is job evaluation? A definition

Job evaluation methods

The job evaluation process – 4 steps

Step 1 – Planning & diagnosis

Step 2 – Design & development

Step 3 – Validation & modeling

Step 4 – Communication & roll-out

Conclusion

FAQ

What is job evaluation? A definition

Job evaluation is the systematic process of determining the relative value of different

jobs in an organization. The goal of job evaluation is to compare jobs with each other in

order to create a pay structure that is fair, equitable, and consistent for everyone. This

ensures that everyone is paid their worth and that different jobs have different entry and

performance requirements.

Job evaluations are developed by HR, often together with workers unions and other

social partners and commercial consultancy companies.

The advantage of job evaluation is that it does not take into account the qualities of the

job holder. According to a report on this topic by the European Commission, the relative

worth of a job is assessed irrespective of the qualities of the specific job holder.

The relative worth corresponds to a ranking, which in turn corresponds to basic pay

brackets or scales (called wage grids). Personal qualities of the job holder (including
seniority, education level, tenure) are rewarded by an entitlement to higher steps within

the applicable pay bracket. 

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Job evaluation requires some basic job analysis to provide factual information about the

jobs concerned. The starting point is often the job analysis and its resulting job

description. Based on this, the job is evaluated. One of the key criteria in the evaluation

is the added value of the job to the organization. Based on this evaluation, the job is

added to the job structure. The resulting structure ensures pay transparency and equity

between gender and minorities.

The European Commission actively encourages the use of job evaluation. According

to Cordis, which coordinates EU-supported R&D activities, 49% of European

organizations in the private sector use a formal Job Evaluation scheme, with SMEs at

less than 3%. This lack of evaluation leads to unstructured wage payment practices and

a lack of requirement-based career and skill development for employees.

Job evaluation methods

There are different methods that can be used for job evaluation. The easiest way to split

these up is to make a distinction between qualitative and quantitative methods. 

Four common job evaluation methods

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Qualitative Quantitative

Ranking method/ pair comparison Factor-comparison

Job to job comparison
ranking method

Job to pre-determined grade

Job classification Point-factor method
comparison

Each of these methods has its own advantages and disadvantages. The qualitative

methods are usually faster while the quantitative methods are more objective and take
into account required skills and responsibilities. The best approach is always a

combination of methods. We will give a brief explanation of each of the methods.

Evaluation method Description

Ranking Jobs are paired and for each pair the most impactful job is chosen. This results in a forc
method/ Paired ranking of different jobs based on their seniority. This approach is only recommended f
comparison smaller organizations with fewer than 100 jobs

Jobs are ranked based on a pre-determined grade comparison. An example classificatio

is a CEO, vice president, director, manager, and operator. This is a pre-determined
Job classification ranking that many US-based organizations use. Grades are created among job families
(e.g., marketing, HR, sales). For more information, see our full article on job
classification.

Jobs are ranked on a series of factors, the most frequently used factors being knowledg
Factor-comparison & skills, communication & contacts, decision making, impact, people management,
method freedom to act, working environment and responsibility for financial resources. Each
factor is assigned points and the total number of points indicate the job’s ranking

Jobs are assessed on required know-how, problem-solving abilities, and accountability.

Point-factor method
Each factor is assigned points and the total number of points indicates the job’s ranking

Assessing rates of pay by reference to market rates for comparable jobs leading to prici
the job based on what it is worth. Does not take internal equity into account, nor the fac
Market pricing
that the internal value of a job may differ from their market value. Market pricing can
perpetuate marketplace inequalities, defeating the purpose of the job evaluation.

Depending on the organizational size and complexity, different methods are chosen.

The paired comparison method (as displayed below) works well for smaller

organizations, while a factor-comparison or a point-factor method works better for larger

organizations.
A simplified paired comparison matrix by Armstrong et al., 2003

Point-factor method

Of all job evaluation methods, the point-factor method is probably the best known. On a

high level, the steps for this approach are as follows: 

1. Jobs are listed

2. Evaluation factors are defined

3. Scoring degrees on these factors are determined  

4. Per job, points are allocated for each factor

5. A wage structure is defined

6. Adjustment of the existing wage structure

The result is a spread of points and a salary range per job, similar to the image below.

Any outliers can be calculated and need to be dealt with on an individual basis. We will

go into more detail in the next section.

The job evaluation process: 4 steps
The job evaluation process involves four steps. These steps are planning and

diagnosis, design & development, validation & modeling, and communication & roll-out.
Armstrong et al., 2003

Phase 1. Planning & diagnosis

In this phase, the job evaluation project is started with an initial workshop. During this

workshop, the evaluation is scoped and approaches for evaluation are decided on. 
In terms of scope, decisions need to be made on cost, time constraints, the degree of

rigor applied, administration, tooling & software, how much external help is required,

how to build on previous projects, and how job evaluation will be used to support equal

pay. 

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The organization also needs to decide on their job evaluation scheme. There are

multiple schemes with different degrees of customization.

 Proprietary. This is an existing framework, created by consultants. It has been tried

and tested, is easy to implement, and requires low internal effort. The con is that it

may not suit every organization and creates dependence on the supplier.

 Customized. This builds upon an existing framework like an (outdated) job

framework that is already in place and builds on top of that. This provides a good

starting point, leads to faster implementation, and helps to create employee buy-in.

Its biggest con is that the framework needs to be sufficiently revised as it may

otherwise not suit the organization.

 Tailor-made. This is a fully customized scheme, developed in-house with the help of

external advisors. It leads to a great fit with the organization, the participatory

process leads to buy-in and enables alignment with a competency framework. The

drawback is that the process will take longer and is a costly exercise.

Next, benchmark jobs are identified, data collection is planned, and a communication

plan is created.

Phase 2. Design & development

In the next phase, the evaluation elements and levels are determined. This often

happens through a workshop. In this phase, it is important to identify elements that are

relatively timeless. Keep in mind: the job scheme is relevant for as long as the elements

it is based on are relevant.

Because of the cost and effort to create a job scheme, they could stay relevant for well

over 25 years. In our article about job classification, I give the example of Russian

organizations that still work with the frameworks provided by the state during the USSR.

Once this is all done, data on the different roles in the organization is collected.

Phase 3. Validation & modeling

In the third phase, the results from the data collection are analyzed and the weightings

of the different elements are discussed. This may require some fine-tuning as initial

definitions may skew the results.

Next, a pay grade structure is drafted, and jobs are categorized. There will always be a

set of jobs that do not match the pay grade structure. An example could be specialist

roles in artificial intelligence and machine learning that are very scarce while crucial for

the company’s future. These may have to be put on a different salary scale. The risk

here is that these jobs may be much more abundant in say 10 years, so by then they

may be overcompensated so this may have to be revised later.

Phase 4. Communication & roll-out

In the final phase of the job evaluation process, the structure is implemented. Best

practices are to explain everyone affected why their pay grade structure may have

changed. There should also be an opportunity to appeal decisions that are perceived as

unfair. Here it is important to hear and investigate what employees have to say.
This phase will be easier if there is buy-in from the organization. Also note, lowering

salaries for workers may not be possible as wages could be protected under national

labor laws or it may prompt people to leave the organization. Taking all of this into

account will be an administrative challenge.

Conclusion
That is it for the job evaluation. There is of course much more that can be said about

this topic but that would require us to write a book. Resources we can recommend are

the Hay job evaluation manual and the book Job Evaluation by Armstrong and

colleagues, which we used as one of the resources for this article.

FAQ
What is job evaluation?
Job evaluation is the systematic process of determining the relative value of

different jobs in an organization. The goal of job evaluation is to compare jobs

with each other in order to create a pay structure that is fair, equitable, and

consistent for everyone.

What are the four job evaluation methods?

Four common job evaluation methods are the ranking method, job classification,

the factor-comparison method, and the point-factor method.

What is the classification method of job evaluation?

The job classification method ranks job based on a pre-determined grade

comparison. An example classification is a CEO, vice president, director,

manager, and operator.

Succession Planning: A Full

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Posted by Erik van Vulpen

According to corporate leaders in a recent report by IED and Stanford Business School,

succession planning is vitally important. Knowing who is next in line to fill senior

positions and being able to groom these people to become your company’s next

generation of successful leaders is crucial to stay competitive. In this in-depth guide, we

will explore succession planning in-depth, provide you best practices, and end with a

succession planning template that can be applied in any organization.

Contents

What is succession planning? A definition

Succession planning best practices

Succession planning model

Succession planning template

FAQ

What is succession planning? A definition

Succession planning is the process of selecting and developing key talent to ensure

continuity of critical roles.

If we look at this definition, we see multiple elements that stand out.

 First of all, succession planning is about critical roles. Not all roles are relevant. It

should focus on roles that are vital to the organization’s competitiveness and

continuity. A junior sales rep may thus be easily replaced. However, your VP of sales

is a role you don’t want to be vacant for very long.

 The second part of the definition is about selecting and developing key talent. This

means that for those critical roles, the best and the brightest are selected and

developed, or groomed. Most of the time, succession planning happens with internal

candidates. The director of sales is groomed to fill the role of VP of sales, while the

VP of sales is groomed to become the new CEO. Occasionally external candidates

can be brought in and up to speed before taking over a new role, although this is

often on a more ad-hoc basis.

 The last part of the definition is to ensure continuity. This is the ultimate purpose of

going through all this work: to ensure that when someone leaves, there is someone

else ready and qualified to take over that role and be up and running in no time.

When we talk about developing key talent, an interesting quote comes from Marshall

Goldsmith, a management writer. He wrote, “change the name of the process from

succession planning to succession development”. In this quote, he emphasizes that the

focus should not be on the planning, but on the development of great successors.

Succession planning best practices

There are a number of best practices that can make succession planning work (better)

in any organization.

1. Have a long-term perspective

Amsterdam-based soccer club Ajax has historically been one of the most successful

clubs in the world, producing talents like Johan Cruyff, Patrick Kluivert, Wesley Sneijder,

and Luis Suárez. One of the reasons the club has been so successful is its long-term

perspective.

Talent is scouted early. Children as young as 7 join the Ajax Youth Academy. As the

children age, the best ones get promoted to higher divisions and the most successful

end up living their dream: playing in the Premier League.

This is an excellent example of the long-term, strategic perspective taken by Ajax.

Talent is groomed for at least 10 years before they join the Premier League team.
Whenever a player of that team leaves, Ajax has multiple candidates lined up who can

replace him, regardless of the position in the field.

2. Ensure structured development

Another succession planning best-practice is planning a well-structured development

process. The Ajax Youth Academy can succeed because of their structured training

program that allows people to train and acquire the skills they need to get better.

This also means that different groups will get different training. Grooming a director to

become VP requires a different approach than developing a VP to become CEO.

Succession planning should, therefore, be linked to learning and development actions.

These can include the development of specific skills or for employees to gain broader

career experience in different functions, units, or geographical locations.

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3. Integrate succession planning with talent management

Succession development is a form of talent management. It is advised to align

succession management and leadership development practices with already existing

talent management practices.

Talent management starts with the employee and identifies how their career path can

develop and their potential be reached. Succession management, on the other hand,

starts with the critical roles that need to be filled, after which candidates that would fit

these positions are identified. These two approaches should be integrated with each

other to maximize the retention of key talent and to ensure relevant development efforts

from a succession perspective.

4. Measure outcomes, not process

When evaluating succession planning practices, success metrics should focus on

outcomes instead of process, according to Goldsmith. Examples of outcome metrics in

this context are the number of critical positions that are filled with an internal promotion

vs. an external hire, or the percentage of promotions that come from the high-potential

pool. Process measurements, like the number of talent or succession programs in

place, should not be measured.

5. Be realistic

Another key point made by Goldsmith is to make realistic plans. Goldsmith gives the

example of an accomplished engineer who has the potential to become COO. In order

to do that, she needs to get more sales experience – but the company would never take

the risk of putting someone without sales experience in a top sales job.
In line with this, another succession planning best practice is to be careful in managing

succession expectations. If the talented VP of sales is being groomed to be CEO, he or

she may leave the company disgruntled when the board decides to keep the CEO for

another 4 years. Clear communication and expectation management is therefore crucial

when it comes to effective succession management.

Succession planning model

Before we provide the succession planning template, we will first introduce the

succession planning model our template is based upon.

This succession planning model is an adaptation from Groves (2005), who proposed an

integrated leadership development and succession planning model. Talent developed

and spotted, identified, actively developed in leadership programs, and prepared for

succession. We changed this model to make it more applicable to succession planning.

We will explain each step of this succession planning model in detail in the next section,

as well as the preconditions required for effective succession planning.

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Succession planning template

The question that remains is how can we design and implement a practical process that

streamlines our succession planning efforts. In this section, we will provide you with a

succession planning template. Afterward, we will translate this template into a

succession planning model that can be used in your own organization.

Preconditions for succession planning

Our succession planning template has two preconditions: the creation of a culture of

leadership development, and the selection of critical roles.

Precondition 1: A culture of leadership

The first precondition is having a culture of leadership. For succession planning and

long-term leadership development to be a success, there has to be a clear commitment

from senior management, including the CEO.

Senior managers and C-level executives need to actively participate in grooming young

talent. Examples of this are events in which future leaders are developed that should be

attended by executives and active mentoring of talent.

In addition, managerial performance appraisal and reward processes should incorporate

leadership development activities, including the identification and development of high

potentials.

Precondition 2: Selection of critical roles

The second precondition is the selection of critical roles. Critical roles are the vital

roles in the organization that if they would be vacant for a few months – or filled by a

bad hire – would create irreversible damage for the company.

The easiest way to identify these roles is to look at the most senior people in the

organization’s hierarchy or to select the organization’s highest earners. If the

organization has a well-defined job architecture with function description and rewards

based on responsibilities, this selection will be fairly accurate.

If there’s no clearly defined job architecture, an alternative could be forced ranking of

functions based on their importance. A CEO is more important than a CFO, and the

CFO is oftentimes considered more important than the CTO. This way top functions can

be identified. Relevant considerations in this process are the scope of the function

(strategic vs. operational), the span of control, the rewards (performance-based vs.
competitive wage), the impact of function on value creation, the severity of potential

mistakes in the function, and the severity of consequences of a bad hire.

When it comes to leadership functions, a best practice here is to not include too many

roles but to aim for the top 0.5% in the organization. Selecting too many critical roles will

make it harder to maintain your managerial succession bench strength, as you need

multiple people on the bench to replace one senior executive.

A four-step succession planning process template

Once these conditions are met and in line with our model, a succession planning

template naturally progresses in four steps:

1. Talent development

2. Identification of leadership talent

3. Leadership development

4. Succession decision

Let’s take a look at each step of our succession planning template.

1. Talent development

Two of the best practices mentioned earlier were taking a long-term perspective and

combining succession planning with talent and leadership development. This makes

sense. Succession planning focuses generally on senior leadership roles that would be

replaced by people currently in mid-level leadership roles. A key practice is, therefore,

to integrate talent and leadership development with succession planning.

The succession management template starts with regular talent development. Many

organizations have talent development programs where high potentials are being

trained, given different jobs and challenging assignments. Relevant talent management

activities focus on career planning, job rotation with the aim to gain more experience,

and leadership competency development.

Top talent is often provided with a mentor. Employees with mentors perform better, are

promoted quicker, compensated better, have more organizational commitment,

personal learning, job satisfaction, and reduced turnover intentions. There are also

psychosocial benefits, like acceptance, encouragement, and coaching, as well as

increased internal exposure and more challenging assignment (Groves, 2005).

2. Identification of leadership talent

During these talent development programs, talent is monitored and evaluated as not

everyone will succeed. I’ve once heard a senior leader say that for every twenty new

management trainees, only one or two are senior leadership material. The rest may be

great for a low or middle management position in the organization but is unlikely to rise

further through the ranks.

The input created from the talent development programs leads to the identification of

leadership talent. This happens through mentors, committees, survey tools or coding

systems used in organizations. These tools are helpful in assessing managerial bench

strength and form the basis for developmental activities.

In this phase, diversity is key. If diversity in the board room is an issue for the

organization, diversity should be a key consideration starting in the talent and

leadership development programs. If these programs are diverse, the chance of more

diversity in the board room is also considerably higher.

3. Leadership development

The selected leadership talent is developed further. This is different from your average

talent development. Future leaders are invited to internal courses and workshops and

are encouraged to develop closer connections to the top of the organization as this will

make them more effective in their future roles.

This group should also be exposed to active learning through challenging projects,

stretch assignments, which are challenging tasks aimed at developing experience

outside of an employee’s regular routine, 360-degree feedback to provide

developmental feedback to managers, and executive coaching on skills they need to

develop.

The succession planning model shows a feedback loop from step 3 to step 2, as

leadership development is new input for measuring managerial bench strength and new

information in this step will impact the identification of leadership talent.

4. Succession decision

Based on the previous steps, a succession matrix is created. In this matrix, potential

successors are mapped for each function.

A key consideration in this step is the likelihood of people quitting the organization.

 Turnover in critical roles. Accurate assessment of the turnover rate for the critical

roles that were identified earlier is key as turnover in one of these roles will engage

your succession plan. In addition, aligning five people to replace the role of a CEO

who is intent on staying for the next 10 years will only lead to frustration, while the

COO may have just one potential successor but has a high likelihood of quitting

 Turnover among leadership talent. Turnover in the leadership talent group is less

disrupting but still very costly. This is the group that is extensively trained. This not

only means high cost but also that turnover can disrupt the entire succession

planning model for the organization. Managing expectations and monitoring turnover

are also key to this group.

Whenever someone occupying a critical role quits or retires, a succession decision

should be made. If not already in place, an onboarding program with clear targets

should be created together with the leaver so that the successor can get up to speed as

quickly as possible.

FAQ
What is succession planning?
Succession planning is the process of selecting and developing key talent to

ensure continuity of critical roles.

What does succession planning mean?

Succession planning means that as a company, you actively develop talent, and

groom the highest potentials for future leadership roles so that when a senior

executive leaves the organization you have a suitable replacement ready.

Why is succession planning important?

If succession planning is done well, senior roles will always be occupied by

people who are well prepared and ready for the job. If not, you run the risk of bad

hires and ill-prepared leaders which can threaten the bottom line and viability of

the organization.

How to do succession planning?

Succession planning has four steps. First, develop talent in talent management

programs through training, courses, challenging assignments and job rotation.

Second, identify top leadership talent. Third, groom this talent through a

leadership development program that includes courses, action learning, stretch

assignments, and executive coaching. Finally, when a senior executive leaves, a

succession decision will be made and you have a qualified successor ready and

waiting.

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