Learn About Employee Grade Levels

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Many employers use an employee grade-level system that helps differentiate between positions and standardize compensation across equivalent skill sets and responsibilities. This type of system helps ensure fair and consistent treatment and compensation for all employees.

Sample Employee Grade-Level Descriptions

Here are examples of employee grade-level descriptions from individual employees up to the Vice President level:

Level A: Entry Level Individual Contributor

Individuals at this level usually follow standard work routines. The following parameters may also apply:

  • Work under close supervision
  • Have little decision-making ability
  • Have no budgetary responsibility or ability to spend without approval
  • Have less than three years of relevant experience

Level B: Experienced Individual Contributors

Individuals at this level usually have procedural or systems experience. They may also:

  • Work under general supervision
  • Make decisions based on established procedures
  • Have nominal budgetary responsibility or ability to spend
  • Have three to five years of relevant experience

Level C: Managers and Senior Technical Professionals and Individual Contributors

Individuals at this level must have command of the procedures and systems used. They may also:

  • Work to specific measurable objectives requiring operational planning skill with little direct supervision
  • Have considerable latitude for making decisions within their unit
  • Have involvement in the hiring, development, and related personnel processes
  • Have budgetary responsibilities
  • Exercise crucial people skills
  • Have five to seven years of relevant experience

Level D: Directors

Individuals at this level must have a thorough understanding of the theoretical and practical application of the principles of their profession. The following parameters may also apply:

  • Have significant latitude for making decisions for their operational or functional units
  • Have hire and fire authority over team members
  • Have direct expense responsibility for significant departmental or unit budgets
  • Demonstrate essential people skills
  • Have eight to ten years of relevant experience

Level E: Vice Presidents or General Managers

Individuals at this level are seasoned professionals in their field of expertise. They also:

  • Give strategic guidance to the units under their control
  • Develop and direct short-term and long-term goals for their units
  • Exercise broad decision-making latitude within their functional units
  • Have complete budgetary control over the functions of their units
  • Make use of essential people skills, including the ability to help develop subordinates develop in their careers
  • Have more than 10 years of relevant experience

Grade Levels and Compensation

Position grade levels are usually governed by a set of compensation parameters described as a compensation grade level. Every position will have its own range of salary levels, from low to high.

Additionally, there may be several layers of the compensation grades where the low, high and midpoint salaries vary from level to level. For example, the Level C Managers category may include junior manager, manager, and senior manager designations, all with their own compensation ranges.

The Role of the Human Resources Department

The process of developing, implementing and then refining position and compensation grade levels over time is typically the responsibility of the human resources department.

Consider a vice president's request to create an all-new position. They would work with the human resources team in the following process:

  • Describe the nature, scope, and responsibilities of the new role in detail
  • Define the criteria for education and background experience required for the role
  • Evaluate the budgetary and decision-making authority of the role
  • Look at the expected career progression for the position
  • Compare the role to others in the department
  • Compare the role and job parameters to others in the industry

Then, the human resources executive would decide which level the position falls into. They'd then apply the compensation matrix and document low, mid, and high ranges for compensation.