What Is a Levels Document?

0:00

HR Party of One is brought to you by BerniePortal.

0:02

In this episode, let’s talk about levels documents.

0:06

Industry analyst Josh Bersin says, “While most companies know they must increase pay

0:11

during times of inflation, they do not understand the problems they create when people feel

0:15

the system is unfair.”

0:17

Faced with unfair or inconsistent pay, people slack off or quit.

0:22

When retention and productivity drop, companies look to HR.

0:25

Pay problems affect around 95% of employers, so that’s 95% of leaders asking HR to fix

0:31

it.

0:32

But despite the problems facing most employers, the other 5% of employers “…were 1.6 times

0:37

more likely to meet or exceed financial targets, 2.1 times more likely to attract needed talent,

0:44

and 1.7 times more likely to innovate effectively.”

0:48

So how did they do it?

0:49

They developed an effective pay equity policy.

0:52

But those take a lot of time to do, and you’re an HR Party of One.

0:56

Time is what you lack most!

0:57

But there’s a project that will generate a shared stake in increasing equity.

1:02

And it gets better: you’re not the only one responsible for it.

1:06

You’re the lead on this project, but others will be committed to its success.

1:10

Before we get there, we’ll discuss: What a Levels Document Is,

1:14

What’s Included in Levels Documents, and Why HR Should Lead This Project.

1:19

Let’s get started!

1:21

What Is a Levels Document?

What’s Included in a Levels Document?

1:24

You might be familiar with the General Schedule the U.S. Office of Personnel uses to determine

1:28

compensation for law enforcement officers, or LEOs.

1:30

The schedule covers grades of experience and locations to ensure fair and consistent pay

1:35

practices for LEOs across the country.

1:38

Levels documents are similar, except they are unique to your organization.

1:42

Oftentimes, they are specific to teams.

1:45

Doing a company-wide levels doc is difficult because organizations have unique moving parts

1:50

that keep it functional, so it’s best to do it for teams.

1:55

Levels docs are visual representations of a team’s skills, scope, and years of experience.

2:01

These three areas are quantified and then used to determine the fourth area, compensation.

2:07

Here’s how BerniePortal does it:

2:10

You can see it’s like an old-school graph.

2:12

Remember in high school, following the x-axis and the y-axis to a specific point?

2:17

It’s the same concept.

2:19

The sum of skill and scope is a number 1 through 8, and then you can look at the corresponding

2:24

years of experience to determine the level.

2:27

Then, move to the correct salary based on that figure.

2:30

This is an easy, simple way to make compensation transparent for your organization and identify

2:35

the skills and scope needed to advance to a higher level.

2:39

Using them is easy, and the information in them is pretty straightforward.

2:42

Let’s cover what’s included.

2:43

So, What’s Included in a Levels Document?

2:45

A good levels document includes four different categories:

2:48

Years of experience Skill

2:50

Scope -and Compensation

2:52

Years of experience is self-explanatory.

2:55

Just keep in mind that it should be scaled to growth, so don’t limit yourself by only

3:00

measuring up to 4 or 5 years.

3:02

The most detailed category is skills.

3:05

Thankfully, this is where the manager or director of a team takes over.

3:08

They should outline the skills of an entry-level hire and then go into depth describing what

3:13

an employee should learn or do to advance each level.

3:17

For example, an entry-level software developer may show level 1 skills by coding reasonably

3:22

well in one or two languages.

3:25

A level 5 software developer may show full competency in five or more languages and know

3:30

how to deploy that code successfully.

3:33

Additionally, managers can use this chance to encourage cross-training.

3:38

Some teams have specialized roles.

3:40

A marketing team may have an analytics expert, graphic designer, content writer, public relations

3:46

specialist, and more.

3:47

For teams like that, managers can break down roles into skills that other team members

3:51

can reasonably learn.

3:53

This subject matter expert, or SME, section is supplemental.

3:56

Also, if you include things like adhering to company policies, following correct communication

4:02

guidelines, and other skills relevant to how your organization functions, then you can

4:07

hard-bake standard procedures into the qualifications for leveling up.

4:11

This encourages managers to stay on top of their teams and encourages all employees to

4:15

follow the rules you set.

4:17

Take a moment and imagine a wonderful, peaceful world where following the guidelines and standards

4:22

set by HR was a requirement to get a raise.

4:25

Who wouldn’t do that?

4:27

How much easier would life be?

4:30

After skills, think about scope.

4:32

The scope of work is the purpose of a team aligned with how a team member can fulfill

4:36

it.

4:37

If a manager is struggling to comprehend what you mean by scope, instruct them to take a

4:41

step back from skills and consider how a certain skill fulfills the purpose of their team.

4:46

For an HR example, think about it like this: leveling up a skill could be learning how

4:51

to run payroll without oversight.

4:53

Leveling up scope could be identifying flaws in how payroll is run and implementing fixes

4:58

that streamline the process as a whole.

5:01

The differences in skill and scope lie between what you learn to the extent that is required

5:05

versus what you learn to be better than what is required.

5:08

When someone levels up their scope, they level up the expectations of their leadership.

5:13

The last category is compensation.

5:15

So, when the other three categories have been described to your standards, you step in to

5:19

determine how compensation lines up with the combined skill, scope, and experience of an

5:24

employee on a specific team.

5:26

You run payroll, so you might be the only person equipped to provide this information.

5:30

And that’s just one of the reasons why you should lead this project.

Why Should HR Spearhead a Levels Document Project?

5:34

Why Should HR Spearhead a Levels Document Project?

5:38

Everyone should be invested and excited in having a levels document.

5:42

Leaders in your org will have incredible utility for it, as it helps managers guide the growth

5:47

of their direct reports, provides clear and consistent procedures for when to grant a

5:52

raise, informs financial leaders on budgeting decisions, and more.

5:55

However, there are certain reasons you, the HR pro, should kickstart and lead this endeavor.

6:01

While managers do the heavy lifting, you’re the one who knows the most about four big-ticket

6:06

items: Compensation

6:07

Standardization Compliance

6:09

and Prosperity.

6:10

Let me explain.

6:11

I’ll start with compensation.

6:12

As an HR Party of One, you know your org’s budget.

6:16

Your many hats are all tied to the financial well-being of your company, so if you don’t

6:21

manage the budget, see your CFO or financial head to learn more about it.

6:26

Talk to your leadership about getting involved in comp decision-making, if you aren’t already,

6:31

because that will help you critically plan for the current and future state of your organization.

6:36

Levels documents help you track compensation so you can adjust for economic changes like

6:41

rising inflation or downturned markets.

6:44

Competitive compensation is your best recruitment and retention tool, so it makes sense for

6:48

you to be involved.

6:50

Alongside compensation, you care about compliance.

6:53

Levels docs can help you remain compliant with state pay transparency laws.

6:58

Moving forward, expect pay transparency to become law in your state if it hasn’t already.

7:04

The law varies slightly in each state or jurisdiction, but it typically requires certain efforts

7:10

in the hiring process, like clear salary ranges.

7:13

Check out the resource I linked for you to walk through pay transparency laws and their

7:18

requirements state by state.

7:20

An important thing to note is that a levels doc should be part of your employee handbook

7:24

or Culture Guide.

7:25

Host it where anyone can access it at any time, such as the compliance feature of an

7:31

HRIS like BerniePortal.

7:33

Falling in line with compensation is standardization, which can help prevent so many workplace problems.

7:38

A levels doc standardizes compensation in relation to professional development so no

7:43

one believes they are being treated unfairly.

7:46

It’s critical that everyone uses the same rhetoric for adjusting pay rates because not

7:50

doing so could lead to pay inequity.

7:53

For example, a manager wanting to celebrate a big win on a project may think a direct

7:58

report is owed a raise.

8:00

A win is worth celebrating, but should it directly result in a raise?

8:05

As HR, you have to ask the questions a manager may not be asking:

8:10

Did the direct report increase their skills in a way that will positively impact their

8:14

work going forward?

8:15

Are others on the team with more consistent, intentional growth expecting a raise due to

8:19

their efforts?

8:21

-Does the current skill, experience, and scope level of the direct report make a raise at

8:25

this time seem like preferential treatment?

8:28

Think of an organization without levels docs or standardized pay scales.

8:32

A manager approaches HR and makes a convincing argument to increase pay for someone in a

8:37

similar situation.

8:38

Well, the person getting a raise has only been around two years, and this project was

8:43

a team effort—even if the “big win” is technically theirs.

8:47

Teammates hear about the raise and become bitter that their hard work is passed over

8:51

in favor of one big win.

8:53

They start talking about it in backchannels, complain, and put in less effort going forward.

8:58

Some even quit.

8:59

Now, HR is stuck spending extra time recruiting to fill those roles, which may throw off budgets,

9:05

the team's ability to hit goals, and other high-value projects HR wants to pursue.

9:11

A levels doc can curtail unfairness and inconsistency in compensation decisions.

9:16

It promotes equity, increases compliance, protects your org from potential liability,

9:20

and helps financial leaders forecast more accurately.

9:25

The fourth big ticket item is prosperity, which encompasses, oh, about 100% of your

9:29

goals.

9:31

By prosperity, I mean the high-value things you want to do to better your organization.

9:36

You want to develop a great culture, find the best benefits, coach managers to be amazing

9:41

leaders, and more.

9:42

A levels doc offers a learning pathway to drive intentional and habitual growth.

9:48

Skilled employees have bigger goals and more ability to increase revenue.

9:52

Higher revenue means more opportunities to hire and retain talent, offer better benefits,

9:57

and improve your culture.

9:59

If you're an HR party of one still struggling to find time to get involved in some of these

10:03

larger organizational goals, then you're likely suffering from EFAT overload.

10:09

For more on employee-facing administrative tasks, or EFATs, and how to find more time

10:14

to contribute to overarching goals, watch this episode on the HR Hierarchy of Needs.

10:20

Starting a project like this is normally overwhelming, but you can leverage a levels doc as a tool

10:25

for every member of your workforce.

10:28

Managers are responsible for parts of it, and your whole organization will reap the

10:32

benefits of defined pathways for growth, increased pay transparency and equity, and a more prosperous

10:39

workplace.

10:41

That’s it for this episode!

10:46

Subscribe to our channel and ring the bell to get notifications about our newest episodes,

10:51

which are released every Tuesday and Thursday!

10:54

As always, thanks for watching.