While people come to work for many reasons beyond pay, pay is a critical aspect of their decision to work for an organisation. A fair and transparent approach to paying your people is more likely to keep and motivate them to work effectively for you.
Remuneration will always be a key aspect of attracting, retaining, and motivating top talent. It should also be a key part of your organisational strategy, and tailored to what is unique about your organisation. Making sure you have a robust basis for assessing the work value of all your organisation’s roles is a crucial foundation for remuneration decisions.
Benchmarking your pay levels to rates of pay for similar positions in the market certainly seems to be a sensible and great value option at face value. However, using this approach, you could be looking at a wide range of jobs from entry-level through to senior positions without understanding the differing criteria at each level and therefore the rationale for the associated remuneration levels. Salary levels also vary due to different specialisms, location premiums, as well as varying organisational, industry and sector approaches to pay. Given these variations, it can be challenging to ensure that you are using the right comparison.
The risk of choosing the wrong information is heightened for unique roles in fast moving specialties and industries such as cyber security or science. Unique and specialised positions can cause significant issues for organisations deciding how much is appropriate to pay for the skill set and accountabilities of the role. When organisations have specialised jobs with no obvious market match, they will face a struggle to find the right basis and data to determine the appropriate remuneration levels for roles such as these.
In addition, linking to existing market rates for a role reinforces any existing under- or over payment for those roles. Relying only on information based on job matching therefore risks not only inappropriate targeting of your remuneration budget and potentially overspending, but also embedding bias into your pay structure. With the recent focus on pay transparency and the potential requirement to be more open about pay levels within your organisation, employees’ perceptions of a lack of fairness in how they are paid could lead to disengagement and costly employee turnover.
Evaluating your roles using a job evaluation methodology offers a robust approach to assessing work value. Job evaluation is a systematic process for establishing the relative sizes of jobs by comparing job content based on a set of common criteria. It focuses on the requirements of the position within your organisation rather than the potential expectations of a generic role. Job evaluation assesses the job value based on the role’s contribution to your organisation’s objectives and strategy, separating this from the current job holder’s characteristics, experience or performance. Linking pay to your organisation’s needs and strategy leads to a more robust remuneration structure as well as building in fairness and stability. This will provide a more robust foundation for your pay structure and give you more confidence in your remuneration decisions, a significant benefit especially in light of the on-going focus on pay gaps and pay transparency.
The recent European Union directive on pay transparency, which came into force in July 2026, places obligations on European employers to be transparent with workers and candidates about pay and pay progression. While New Zealand employers are not bound by this directive, the expectations of pay transparency and fairness are still relevant.
The EU’s directive indicates that job sizing systems need to ensure that any pay differences are based on legitimate job-related factors rather than bias or discrimination. While the EU doesn’t prescribe a specific job sizing method, it does give a strong steer towards a more analytical approach rather than relying only on job classification or job match approaches:
“The analytical job evaluation methods, being systematic and complex, have the potential of being less discriminatory than non-analytical methods and they are therefore considered to be most appropriate for job evaluation in a gender equality context.”
The directive has effectively strengthened the focus on job evaluation, because this approach to sizing jobs provides a systematic, objective framework to assess the relative worth of different jobs within an organisation. Using this approach allows you to assess the actual work value of all your roles within the context of your organisation.
Another advantage of a job evaluation methodology for assessing work value is that it enables access to a broad range of remuneration information to inform your decision on an appropriate level of pay for your roles. For instance, Strategic Pay can, from its comprehensive remuneration database, provide information from a range of sectors, industries, relevant job functions, or a combination of these, providing more comprehensive evidence for what is an appropriate level of pay for the role. Our job evaluation method especially benefits organisations that may have little structure in place around how they pay people. Often this happens in smaller businesses where the process for deciding pay levels is ad-hoc, but this can also occur in larger organisations that are using traditional and/or out-of-date benchmarks.
Having the right remuneration structure for your organisation, underpinned by a robust foundation is a crucial building block to ensuring equitable pay outcomes and for attracting, retaining and motivating your people. Using a job evaluation methodology to assess work value, rather than relying on information about a generic role, will reflect the value of each role to the organisation. Because job evaluation analyses the specific job within its organisational context, this approach enables you to reflect that value, reward your employees’ contributions effectively and also avoid embedding existing pay inequities into your pay structure. As a result you can be confident that you are targeting your remuneration budget effectively and are ready to be more transparent about your pay decisions.