Job Evaluation:  an assessment of job tasks and responsibilities in order to create a top-to-bottom hierarchy reflective of the relative value that the company places upon its jobs.

Throughout my Compensation career I have never enjoyed having to evaluate jobs.  Quite the opposite.  As soon as I progressed high enough in my organization I delegated responsibility to a subordinate and washed my hands of it.  Job evaluation is a thankless task, with the evaluator subject to criticism from all sides.

• If you agree with an evaluation request, you are only admitting to the obvious.

• If you disagree and value the job different (lower), you clearly do not understand the key duties and responsibilities.

• The subjective nature of the process is viewed with suspicion by everyone.

• Job evaluators do not receive Christmas cards.

In spite of my disdain for the process the act of evaluating jobs has been found useful by companies since the 1930′s.

• They need a method to establish a hierarchy of job importance (A is bigger than B, B is bigger than C, etc.).

• They need to explain the relationship of jobs, one to another (A is how much bigger than B?).

• They want to set employee expectations and manage the Reward process (price the jobs).

Job Evaluation does have other purposes as well.  The internal assessment sets career progression steps and assists with organizational development (which jobs are necessary).  It also allows the company to avoid criticism that the competitive labor market (external forces) has dictated which jobs should be paid more or less than others.

Despite these worthy contributions the criticism of the process continues to come from many directions:

• Job descriptions are often poorly written, with content manipulated by managers to gain advantage.

• Pressure is often brought to bear on the Evaluator to increase (almost never the opposite) a rating.

• Evaluation language, forms  and procedures are often complicated and confusing to employees and managers alike.

• Senior management support for the integrity of the process is often limited.

• Employees are skeptical of an inherently subjective process where decisions are made by someone from outside their functional area.

For those who use a job evaluation process (whole job or quantitative), a further step of valuation is to place a price tag on each position – and to do that you need to conduct a study of the competitive marketplace.

Market Pricing

Here is the one process that gets you straight to the core of the matter – placing a monetary value on your jobs.  Some of its advantages as an evaluation process are:

• It is more objective, especially if using multiple survey sources.

• It is easier for management to accept, vs. the judgment of “some analyst in HR.”

• It is easier to defend results to otherwise biased managers.

• The evaluator is subject to less criticism (a personal favorite).

Most companies follow both processes, job evaluation and then market pricing.  Does that two-phased effort add value?  I have my doubts, especially if the prime goal is to establish a salary structure.

Sometimes the competitive market conflicts with your hierarchy.

What if the marketplace indicates a job is worth @$50,000, but as a result of your evaluation process the current midpoint is either much higher or much lower?  Ignoring the market could prove costly, in terms of either dollars or employee disengagement.  But if you follow competitive practice – then what is the point of your internal, job content-based evaluation process?

When faced with a choice most companies would make the change.   Dealing with reality, they would say.  So at the end of the day the true indicator of the value placed on your hierarchy is through market pricing.

Another concern is that, while Job Evaluation can be a long and tedious process it isn’t a sufficient end in itself.  You still have to price the jobs to create an effective salary structure.  The external survey data needs to be “interpreted” by a skilled analyst in order to ensure position matches are appropriate and the subsequent data properly integrated.  We call this “massaging the data.”

Some examples of how market data can be massaged between the survey source(s) and the salary structure:

• When you cluster diverse market data points into a graded salary structure.

• When you are not able to afford competitive rates you may lower the value of each position and create a below market salary structure.

• When you move jobs into certain grades to reflect the organizational realities of your company (the senior analyst must be either one or two grades higher than the core analyst).

• There will also be “favored sons,” positions that must be slotted a certain way in your hierarchy, regardless of market data.

If your goal is to price the internal and external value of your positions you do not need an involved job evaluation process, but you do need market pricing.   I would suggest a market pricing effort first, to establish competitive pay levels, and then if desired for other purposes follow up with some form of whole job evaluation process (keep it simple).  Finally, the evaluator(s) should recommend a degree of massaging to ensure that the final results “make sense,” both from an internal as well as external viewpoint.

The one constant theme that Human Resource professionals emphasize when it come to international assignments (expatriate employees) is that the experience costs a great deal of money.  Most of you reading this will simply nod your head at such a cautionary warning, yet not fully understand the why of it.  Perhaps the topic doesn’t concern you, for now, but as managers who may become involved in such adventures down the road, you need to know the cause if you ever hope to manage this expensive proposition.

While companies continue to try new strategies for employing talent overseas (shorter assignments, use of third country nationals, extended business trips, shared responsibilities, etc.) two central premises remain; 1) companies will continue sending employees on overseas assignments, and 2) the cost of those assignments continues to be a big pill to swallow.

Fueling Persistent Cost

If you accept the premise that an employee sent overseas should be kept “whole” (expense-wise) with their home country situation (maintaining their income and expense exposure as if they had never left the U.S.), then certain incurred liabilities naturally fall to the company.

This premise is an important point, and a foundation for future planning.   The  assumption is that the employee should not economically suffer, but neither should they receive a windfall.  To the employee the experience should be cost-neutral.  However the same cannot be said for the organization.  They often have to shoulder a sizeable burden.

First of all, the U.S. is one of the few countries in the world where – no matter where you work – you continue to incur a tax liability on your earnings – while also being liable for earned income taxes in the host country as well.  Uncle Sam demands his share, and will follow you around the globe.

The difference is though, that any additional tax liability would ultimately be paid by the company.

And the second dark cloud over expats?  When establishing the terms and conditions that will govern an international assignment, remember that whatever the company provides the employee beyond what they would have received had they remained in the US, is considered taxable income to the employee.

For example, such taxable items would include, but not be limited to:

• Home leave transportation:  A personal expense (vs. a business trip) that includes air fare, taxis, meals enroute, etc.  Terms and conditions usually allow for one trip per calendar year – though that can be negotiable.

• Cost of living allowances:  That monthly allowance you receive to make up the difference in living costs . . . it’s taxable.

• Housing allowances: If you continue to maintain a U.S. residence (usually advised) the company will provide accommodations, but the cost of that residence is taxable to you.

• Utility payments: From electric to water to phone to garbage collection and more, if the company pays for it then it’s a taxable item.

• Supplementary benefits (host country): Additional local coverage (i.e., National Health Service) to ensure immediacy of care wherever you might find yourself overseas.

And don’t forget the family.  Those expenses paid out to provide dependents with programs or services are also deemed as taxable income of the employee.  For example:

• Language lessons: English may be the international language of business, but not so much in the supermarket.

• Orientation: Teaching the expat and family members about the local culture, how to get along, how to fit in and what to expect, while always useful, is especially important when the local language is not English.

• American-style schooling:  Usually a point of insistence for expats with school age children, the concern here is to ensure that the children are educated in a fashion that would be recognized (credit received) by school authorities back home.

You Don’t Know What You Don’t Know

To compound the internal challenges, too many managers know too little about the true costs of expat assignments.   This ignorance leads to misconceptions, misleading comments to employees and in some cases a too casual consideration of costs.

• “They speak English, so just get on the plane.”  It’s a common refrain, as if we all have the same legal system, health care, work attitudes, etc., and any minor differences could be solved by a short conversation.

• “The money’s been budgeted.”  A classic excuse, as if that in any way justifies an expense.

• “Let’s go around company policy to save money. ”  Short term thinking (and shortcuts) that more often results in a failed assignment.  And how expensive is that going to be?

Having spent five years overseas on an expatriate assignment, here are a few “takeaways” from that experience.

• My first W-2:  The amount was a shock, insofar as the tax preparers lumped together as taxable income everything that the company had provided for me.  That was my first realization of exactly how expensive an expat assignment was to the company.  This is where the 2x and 3x annual salary cost guesstimates were born.

• Local confusion:  My UK Controller was unable to determine the expat costs for his business unit.  Lines of communication between the host country and the corporate-sponsored tax preparers broke down often.  That’s when the finger pointing starts.

• Lost information:  After extensive investigation it seemed that data regarding assignment costs and local liabilities were buried among several budget line items.   Highlighted cost metrics were absent, and no one was watching the store.

• Taxation:  There are many confusing aspects of foreign service credits and reciprocity tax treaties.  Not my area of expertise, but even several years after returning from overseas my tax advisor was still dealing with foreign tax credits.  The back and forth of determining corporate tax liabilities, or avoiding them, is a science unto itself.

So yes, international assignments for your employees can be a very expensive proposition.  But those expenses can be monitored; they can be controlled.

Remember this formula for getting into financial trouble: if you take unknown assignment costs and add the lack of stated assignment ROIs, plus throw in a bit of insensitivity for the realities that expats (and their families) face, that recipe will blow up in your face every time.

That you can take to the bank – for withdrawal, not deposit.

Once your company decides to send an employee overseas on expatriate assignment the danger of imminent waste looms large.  The problem usually begins with management not understanding or even choosing to ignore the real costs of the international assignment.  The looming money pit is then deepened by having only a weak business reason to support the assignment.   If you lack a compelling business justification for why an employee is needed overseas, it’s likely that you won’t be able to measure whether their assignment will be a success or not.

Below are some of the major reasons for the cost spiral of money slipping out of your hands; however, this is by no mean an all-inclusive list.  I have no doubt that you can provide your own reasons as well.

• Don’t worry about the ROI

For some companies it’s easier for a manager to have an international assignment given a green light than it is to have a piece of hardware or software approved for purchase.   Where is the business case?   Where is the justification via projected financial return that management should be held accountable for?  Is anyone being held accountable that an ROI is achieved?

You should think twice before agreeing to pay out 2-3 times annual salary (per year) to provide for an expatriate assignment.  “It’s in the budget” is never a good business reason.

• Tell the employee that they are the only one who can do the job

Once an employee realizes that they are the only, or preferred choice for the assignment, you lose all negotiating leverage.   I recall one fellow who insisted that he and his family live in Inner London (meaning: uber expensive) – though the office was 35 mi. north – or else he wouldn’t take the assignment.   Don’t expect someone holding leverage to be reasonable and accommodating when discussing the terms & conditions of what you are willing pay for.

Strive to develop a stable of qualified candidates.   It would also help if you remember that the ability to perform the job should not be the only criteria for selection.  A bad cultural “fit” would be a painful and expensive experience for everyone.

Note: an employee who displays an attitude of doing you a favor, versus appreciating the career opportunity being offered, is a bad bet.  Count on it.

• Don’t bother to create an international assignment policy

Unless you enjoy living in a “let’s make a deal” world, you would be advised to lay down an international assignment policy, and then adhere to it.  You will still be challenged by the employee / spouse to make improvements in their terms & conditions, but without the support of a policy you will be hard pressed to stand your ground.

Note: make sure all terms & conditions have been confirmed before the plane departs.  Once you have an expat on the ground in the host country you have lost whatever leverage you might have had.  From there you will agree to term revisions, because senior management will conclude that having already made the investment you have to keep the expat happy or risk the assignment.

• Focus on the employee; don’t worry about the family

Even an otherwise contented expatriate will be rattled if every night they come home to complaints about life in the host country.  Such a situation will distract the employee from concentrating on their assignment, and eventually you will face the need to further revise terms (increase costs) and / or the employee will throw in the towel and the assignment will be deemed a failure.

Thus you should be sensitive to potential family issues and include everyone in cultural orientations.  The family is the expat’s support group, and if they are unhappy . . . well, you know the rest.

• Confuse assignment costs by using multiple budget categories and line items

This tactic makes it very difficult for someone to follow, or understand the full extent of the costs involved.  During my own five years spent overseas on assignment, neither Corporate nor local Finance was able to explain the full costs involved.   They had assigned expenses into so many diverse costs centers and budget line items that the confusion never cleared.  Imagine the drip – drip – drip of your money if no one is even asking – or looking.

If no one is watching the costs of the assignment, those costs cannot be controlled.  It would be like handing over a blank check – with no guarantees of gaining anything in return.

Finally, watch out for the manager who tries to “save money” by circumventing HR assignment policies.  These creative thinkers consider that short cuts save money, but typically such “cuts” do little more than alienate the expatriate (and / or family) by treating them as second class citizens.  Bad idea.

The phrase, “must be able to work with an Executive Assistant’s PMS” was left in a finalized job description and eventually found itself placed in the permanent files.  No one read the text, just processed the description as submitted.

The text from an incentive performance appraisal form read like an Average contribution, with no particular effort especially noteworthy or highlighted for special attention.  One would naturally presume that the accompanied rating was “Average.”  Yet the employee was actually rated “Superior” and granted a large discretionary bonus award.

Is anyone reading this stuff?

Have you seen your own examples of this behavior?  Paperwork processing viewed and handled as more important than what’s actually written on the paper?  As if the submittal of the form(s) is project completion itself; the rest is incidental, sort of a by-product.

This by-product (otherwise known as the text) could be replete with erroneous statements, inappropriate language, assumptions not approved by management, etc.  Or you could have missing elements that are critical to the credibility of the form – and the process.

Sure, sure, I know the rationale (“excuse” sounds so lame).  Sometimes you find so much effort invested in simply getting papers back from management (job descriptions, performance reviews, incentive assessments, etc.) that quality control goes out the window.  It’s like you’d be asking for more from them if you also expect the forms to make sense.

When processing large amounts of paper (focal date reviews, annual bonus awards, etc.) the first papers submitted likely do receive an appropriate scrutiny, simply because they’re the first ones received and you have more time.  But then it gets harder to keep pace as more papers keep coming in.  And right before the due date there’s likely to be a flood of last-minute entries.  So eventually you find yourself merely processing the incoming mail, checking off the manager’s name with a, “Yep, we got it.”

Sound familiar?

The same problem arises when you expect the performance rating text (supportive material) to match the submitted score.  That’s reasonable though, isn’t it?  However, if you read the review without looking at the score, how many times would you be able to predict the answer?  How often does the “Superior” rating read like “Average?”

Yet these gaffes do get processed, are read into the official record and personnel files, and are possibly the same documents that could see the light of day in a courtroom.  Because no one bothered to read what was written?

What did you do?

If you did notice such inconsistencies (for lack of a less polite term), what did you do about it?  Did you send the form(s) back with a polite, “try again,” or perhaps you refused to process the reward payment until the offending manager got it right?  Be honest now, often do you put on the policeman’s hat and risk angering your management team?

And therein lies the problem.  If you don’t read the stuff, how do you know you’re holding gold or lead?  Quality or garbage?  And you can’t correct he unfairness of the system if you don’t know which submitted form is wrong, and who committed that wrong.  You’re relegated to an administrator, a paper-pushing drone.

Out in the real world there are many managers who, in effect are saying, “how do I fill out this form to give Bob a superior rating?”  That’s what they care about, and even start the process with “Superior” already checked off.

But let’s be fair.  Often times corrective action is not that easy.  Every HR pro worth their salt will tell you, it’s all about picking your battles.  It sounds easy to reject a manager’s form submittal, but we all know the corrective response is often a matter of who is the offending party.

Sometimes, like with job descriptions and the PMS comment, you may have to make the corrections yourself.

But even a spotty record of enforcement would be an improvement over what happens all too often.  And if they know you are reading what they write, perhaps that fact alone will serve to reduce the infractions.