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#1

Hay Method  
Posted: 10/01/2008 05:47am   266 Views
  
I just started working for a company that uses the Hay system as it's primary method of job evaluation and I am really struggling with it.  I'm not sure most people care how many points their job is worth when another company down the street is paying more for a hot skill set.  Do any of you out there use Hay and can help me understand and accept the methodology?  Also, are you aware of any major corporations out there that use Hay?  Thanks!

Private10775

   
Hay Method  
Posted: 10/01/2008 07:53am  
  

While I can understand some concerns about Hay and their job evaluation methodology, I have found them to be a critical resource in turning around the US Postal Service's compensation system for white collar employees.  

Here's how I would grade their services for the USPS over the last 13 years:

  • Salary level information      A+
  • Pay practices information   C
  • Benefit level information     A+

Salary level information:  Because we have over a thousand postions for our 70,000+ white collar incumbents, and many of those positions are perceived by incumbents to be "unique", we needed an organization that could credibly analyze our jobs and make the link to what the private sector does.  Hay's highly regarded job evaluation system was critical to bringing that credibility to the table.  Plus, having an expansive customer base gave credibility to the salary information that they provided.

Pay practices information:  We needed strong pay practices information to show our management associations that general increases, COLAs, and step increases were not compatible with our statutory mandate to have compensation comparable to the private sector of the US economy.  Unless things have changed recently, this was not one of Hay's fortes.  But to their credit, Hay was willing to accept other research sources into their reports (with proper citations and credit), so that we could tell the right story to our management team and associations about pay practices.

Benefit practices information:  Hay had a strong benefits valuation methodology, benefits practices database, and customer valuation database.  This was extremely helpful in painting a picture of exactly how our benefits stacked up with the private sector.      

So for total rewards consulting, I highly recommend Hay. 

But like anyone contracting for intelligence services, you need to know what you need, why Hay is the best outfit to provide this service, and be clear about your expectations and deadlines.  If an organization becomes too dependent on Hay and their methodology, that is the organization's fault, not Hay's.

(In case you'd like to read more about the transition from an entitlement to a performance culture at the USPS, check the WorldatWork articles below) 

 http://www.worldatwork.org/waw/adimLink?id=16807

 http://www.worldatwork.org/waw/adimLink?id=16925&nonav=yes

 http://www.worldatwork.org/waw/adimLink?id=24147


Private10790

   
Hay Method  
Posted: 10/01/2008 08:30am  
  

Question is too big to answer simply or easily.  Do research.  Search past discussions on this forum using the upper right search tab and enter Hay Plan.  See the 1981 National Academy of Sciences report on job evaluation plans (Women, Work & Wages, Equal Pay for Work of Equal Value, by PhDs Don Treiman & Heidi Hartman) and dozens or articles and books on the antique internal equity classification plan that is to the comp profession what the Curtis Jenny is to the aircraft industry.

Your Hay consultant should point you to dozens of users ( probably only the relatively happy ones) and should have a handful of articles on that "how do I deal with market under Hay" subject for you.  Quick answer is:  you ignore it or you tweak it (and the consultants make more money).

If you are willing to pay everyone more than the market requires, it might not reflect your internal equity but it will create an internal value structure.

E. James (Jim)


#2

Hay Method  
Posted: 10/02/2008 04:12pm  
  

We are a financial services organization of about 3500 nationwide and switched from Hay to market pricing about 4 years ago.  It was a painful transition but a positive one.

Hay encourages development of skills expertise, but it also encourages unique job descriptions.  We had something like 3000 different titles in the organization--almost no two positions were alike!

Suggestions:

-If you're not using a market-based factor in addition to Hay, consider doing so. That will help with the "hot skill set" issue you describe. Also consider MBO where there is significant bonus opportunity for certain jobs.

-If there's receptiveness in the organization, try to make a case for transitioning away from Hay.  As our VP said, it's cutting edge 1912!

-If you're stuck with Hay, try to limit the number of unique job descriptions out there.  Then, if you ever do switch, the groundwork is in good shape.


#2

Hay Method  
Posted: 10/02/2008 04:13pm  
  
To Paul's point, Hay consulting is a different animal than the Hay method.  You can use Hay consulting and still have market based pricing. 

#3

Hay Method  
Posted: 10/02/2008 05:30pm  
  

The fact that an organization has 3,000 different job descriptions is not an indictment of the Hay system, but an indictment of the abilities of the managers in that organization to use it effectively and to control the number of positions. 

In this case, it appears that management has used the Hay System as a scape goat for their inability to manage intelligently. Without competent management, any system will have problems. Managers should look first to themselves for the source of problems, not to a system that many companies have used successfully.

 


Private12770

   
Hay Method  
Posted: 10/02/2008 05:43pm  
  
It is true that management can destroy the effectiveness of *any* evaluation system. Managers seeking to avoid decision-making may likely point at the *system* as the problem. I've been in companies where managers blamed the "Hay Grades" and the "Hay salary ranges" as being behind a company's issues. What they avoided was an understanding that managers make the decisions, or *should* make them. But its human nature to blame others, especially a *system* that can't speak for itself.

#4

Hay Method  
Posted: 10/03/2008 06:11am  
  

Echoing the thoughts of the last few posts, it is too easy - and a cop-out - to say to your internal customers, "I don't know how they do it, but Hay has a great reputation so we follow their guidance."  This is abdicating and diluting your own role of managing the compensation function.  It makes Hay the "black box", the mystery, the enigma, which then becomes the wrath of internal customers who don't like being told that their jobs aren't all they're cracked up to be. 

I have had the dubious pleasure of doing job evaluations in two of the largest organizations in the country.  Any new manager to a function always gets pummeled by their subordinates that they are doing hard work that needs to be upgraded.  So within a year of the new manager's assignment, he/she has a proposal to upgrade job grades and add staff.  The cop-out comes when HR/Compensation says, OK, lets send it over to Hay to see what they say; tells the internal customer that Hay says the job is no bigger than when they evaluated it three years ago; and blames Hay for the decision. 

No wonder Hay gets a bad rap!  But guess what!  Its not really Hay that is getting the criticism - its you!

Now lets imagine that you use some other job evaluation/market pricing consultant besides Hay.  If HR/Compensation uses the same approach that they used with Hay, what do you think will be the reaction of internal customers to the new consultant?

As credited to Yogi Berra, "Its deja vu all over again!"     

 


#4

Hay Method  
Posted: 10/08/2008 06:00am  
  

To the Anonymous poster above who said, "If there's receptiveness in the organization, try to make a case for transitioning away from Hay.  As our VP said, it's cutting edge 1912!" 

Obviously, your VP is adept at quips, but not at facts.  Hay was founded in 1943. 

Now here's a challenge for you for making such a strong statement.  Report on this string the job evaluation methodologies of, say, five other consultants that offer job evaluation systems.  I bet most of them use a variation of the Hay methodology! 

(PS:  I am not an employee or contractor of Hay.)


Private10790

   
Hay Method  
Posted: 10/08/2008 06:00am  
  

No, not really.  Few (if any) of the Bigs went down the closed-black-box route of Hay's quantitative program. 

Most went to whole-job options instead:

  • ranking (including market pricing/comparison)
  • paired comparison
  • classification banding
  • slotting

Few went to the greater trouble of the statistical rigor required for quantatitive factor evaluation methods for distinctly different program types:

  • numeric based (nominal, interval or ratio)
  • point-factor
  • factor comparison
  • regressed questionnaire or job component models

But every job evaluation or classification system has the common element of rank-ordering jobs (and/or skills) for pay applications.

Some may look like Hay's in terms of providing point values, but the advances in computer technology and  PC-based mathematical modelling with new predictive statistical methods (spline curves were only discovered a few years ago, for example) have made it not only possible but essential for program designers to custom-validate pay plans for the characteristics of the specific client unit and the equal pay laws of the 1960s that post-dated the early pay plans like Hay,  Natl. Metal Trades (1942) and the Federal Pay Plan.  Neither necessary nor desirable to stick to a single off the shelf  fixed black box like those, these days.  But they're easier for a novice sales staff to sell.


E. James (Jim)


 
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