A job grade is the level a role holds in the company’s job hierarchy, based on how big the job is rather than who does it. Each grade carries a pay range, so the grade decides what a role can be paid, and often what benefits it gets. It works hand in hand with the pay band.

How a role gets its grade

Grades come out of job evaluation, which compares jobs to each other on the work itself. The common approaches:

• Ranking: evaluators put whole jobs in order from largest to smallest. Quick, fine for a small company, but hard to defend as it grows.
• Classification: grade definitions are written first, and each job is slotted into the one that fits best.
• Point-factor: every job is scored against set factors such as knowledge needed, complexity of problems and accountability for results, and the total points map to a grade. This is the most widely used analytical method.
• Hay method: a proprietary point-factor system, now run by Korn Ferry, that scores know-how, problem solving and accountability. Consultants often use it for larger organisations.

Whichever you choose, evaluate the job description, not the person in it. A brilliant executive in a mid-sized job still holds a mid-sized grade.

Grade, band, title and family

Do not mix these up. The title is what appears on the visiting card. The grade is the internal size of the role. The pay band is the money range attached to it; many Indian firms group several grades into a band, such as B1 to B4. A job family groups roles by type of work, so grades run through each family. Two titles in different families can sit on the same grade, which is the whole point.

Illustrative example: suppose Grade G5 has a range of Rs 8,00,000 to Rs 12,00,000 a year, with a midpoint of Rs 10,00,000. A person paid Rs 9,00,000 has a compa-ratio of 9,00,000 / 10,00,000 = 0.90, so they are below midpoint, which is a sensible place to look when planning a salary increment. Check any real case with the compa-ratio calculator.

In an HRMS, the grade is a field on the employee that salary structures, appraisal cycles and benefit eligibility can key off. The usual trouble is grade creep: promotions handed out as a retention tool until half the company sits on the top grades and the structure stops meaning anything.

Frequently asked questions

Is job grade the same as designation?

No. Designations are titles and can multiply freely, while grades are a controlled, limited set. Several designations can share a grade.

Do we need grades if we are a small company?

Not on day one. Once you have 40 or 50 people and compare offers for similar roles, a basic grade structure prevents arbitrary pay gaps and helps with pay equity checks.

Can the grade change without a promotion?

Yes, if a job is re-evaluated because its scope changed. That is a regrading of the role, separate from a promotion of the person.

Explore how roles are grouped before grading in job family.