As of March 2026, the Swedish government has officially paused the national implementation of the EU Pay Transparency Directive and is formally calling for a renegotiation of the Directive at the EU level. The Svenskt Näringsliv (the Confederation of Swedish Enterprise) is particularly scathing of job evaluation, pointing to it as a  “clear example of an unnecessary administrative burden” Svenskt Näringsliv also added that “Job evaluation is neither a new nor a straightforward method. It is resource and time intensive to introduce and maintain and, due to its reliance on static categorisations, risks inhibiting the development of both job roles and organisations.” ​

Frederick Taylor is no doubt turning in his grave! Svenskt Näringsliv position on job evaluation is a bold one and one that deserves a closer look. It is inevitable that employer bodies and perhaps governments in other EU member states will either overtly or covertly use the same arguments. In this blog, I summarise where the arguments against job evaluation hit the mark but ultimately miss the importance and necessity of robust job evaluation in the new pay transparency era.

Where the Swedish Critique Hits the Mark

Svenskt Näringsliv raises several points that many organisations quietly recognise.

1. Job evaluation demands significant resources. No argument with this one. Implementing and maintaining a robust job evaluation framework requires time, governance, and ongoing calibration. In fast‑moving organisations, it can feel like a heavy lift.
2. Rigid job structures don’t reflect modern work. Today’s roles evolve quickly. Skills emerge overnight. Teams form and dissolve around projects. Traditional job families can struggle to keep pace with this level of fluidity.
3. The idea of an “objective job value” is increasingly challenged. The assumption that every job has a fixed, measurable value — independent of the individual or the context — feels increasingly out of step with collaborative, digital, and dynamic work environments.
These are valid concerns. But they’re only half the story.

Where the Swedish Argument Falls Short

The Swedish critique risks overlooking the very reason job evaluation exists in the first place.

1. Objectivity isn’t a flaw — it’s the foundation. Job evaluation intentionally separates the role from the person performing it. This is not a limitation. It’s a safeguard. In a world moving toward mandatory pay transparency, objectivity is not optional. Job evaluation is how organisations:

• reduce bias of both the conscious and unconscious variety
• ensure internal pay equity. If organisations are not using job evaluation as the basis for pay equity, I would love to know what they are using instead!
• build defensible pay structures by linking salary bands to relative value of jobs in their organisation hierarchy
• comply with equal pay requirements. It is no coincidence that employers heartache with job evaluation got much worse when it became clear that the EU Pay Transparency Directive, shifted the burden of proof from the employee to employers in equal pay claims.

 
2. Modern job evaluation is far more agile than its reputation. The stereotype of dusty binders and rigid scoring sheets, and “black box” complexity is outdated. Job evaluation has evolved — quietly, but significantly. Leading organisations now use:

• agile job architectures
• skills‑based frameworks
• digital evaluation tools
• regular refresh cycles

3.Without job evaluation, what’s the alternative?

• Market pricing alone? This would appear to be volatile due to the lack of robust market data. My personal lived experience over 30 years looking at market data is that the quality and robustness of market data has deteriorated over time. An additional consideration is that for most hot jobs, market data does not exist.
• Manager discretion? Too risky. I can pretty much guarantee that there is no better way for an employer to lose an equal pay claim case than justifying pay differences on the basis of  “manager discretion”.  
• Unstructured relativities? e.g. where job levels or pay differences that have evolved organically over time.  These will simply not stand up from an equal pay for work of equal value perspective.

For all its imperfections, job evaluation remains the only systematic method for establishing internal pay equity. The real issue is not job evaluation itself, but how It is used. In conclusion, Svenskt Näringsliv is right to challenge legacy job evaluation systems — the ones that are rigid, outdated, and rarely updated. But the solution isn’t to abandon job evaluation. It’s to modernise it. Job evaluation doesn’t need to be scrapped. It needs to be upgraded. A fit‑for‑purpose job evaluation approach today includes:

• lighter, more flexible frameworks
• integration with skills and career frameworks
• frequent updates
• digital tools that reduce administrative burden
• alignment with market data rather than replacement of it

So… Is Job Evaluation Still Fit for Purpose? Absolutely — when it evolves with the organisation.The Swedish critique highlights genuine challenges, but it underestimates the value of a well‑designed, regularly refreshed, transparent job evaluation framework. In an era of increasing pay transparency and regulatory scrutiny, job evaluation isn’t becoming obsolete. It’s becoming indispensable.

Click on "Download File" below for a PowerPoint version of the slide show

Recognising the Imperative of Compliance
Organisations must swiftly internalise that compliance with pay transparency legislation is not optional. The consequences of non-compliance are both significant and painful. The material costs include the expense of addressing pay equity claims, such as paying arrears and penalties. Beyond financial ramifications, non-compliance can lead to reputational damage both internally among employees and externally in the broader market. Additionally, there is a considerable resource burden associated with managing pay equity claims, making non-compliance an unwise and costly strategy.
Embracing Pay Transparency
With global regulations increasingly mandating pay transparency, it is prudent for organisations to embrace this change. Leveraging the requirement for pay transparency can positively influence employee engagement and morale. Resistance is futile and will only result in wasted time and resources; it is better to proactively adapt to the inevitable shift towards transparency in compensation practices.
Cultural Change and Managerial Upskilling
For many organisations, pay transparency marks a critical inflection point that drives cultural transformation. Organisational culture is defined by behaviour, and the increased availability of pay data—both within the organisation and externally—will shape employee expectations and behaviours. It is essential to upskill managers so they are equipped to effectively address employee concerns regarding pay transparency. The scope of the required effort should not be understated; whatever time is estimated to manage manager and employee pay transparency requirements, it should be multiplied by ten to reflect the true scale of the commitment needed.
Dynamic Nature of Pay Transparency and Gender Pay Equity
Pay transparency and gender pay equity are highly dynamic, especially at the level of specific work categories. Compliance can fluctuate from month to month due to factors such as employee turnover, hiring, promotions, and changes in gender composition. To navigate these complexities, organisations must invest in robust data analytics and reporting capabilities. This infrastructure enables leaders to make informed decisions about equal pay practices and maintain compliance over time.
Sharpening Organisational Practices
Effectively managing pay transparency requires disciplined project management, rigorous stakeholder engagement, and a degree of clarity and honesty in pay-related matters that is often lacking in many organisations. The era of relying on generic statements such as "we pay for performance" or "our pay is market competitive" has passed. Robust and well communicated job sizing/classifications frameworks will be the order of the day. Organisations must now communicate transparently and substantively about their pay practices to meet the demands of employees and regulatory bodies.

During 2025, I hosted a number  of highly interactive 3-hour live-streamed workshops designed for HR professionals gearing up their preparations for the EU Pay Transparency Directive. In these workshops, I go beyond detailing the requirements of the directive. I get into the weeds of assessing your organisation readiness and detail how best to prepare for the implications of the directive.  

If you would like me to deliver this workshop for your organisation please feel free to reach out to me at [email protected] to arrange a time to discuss your requirements. 
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“Show me the incentive, and I will show you the outcome.” Charlie Munger

Let’s start by examining the difference between a bonus and an incentive. A bonus is typically paid after the fact and does not require specific criteria to determine the amount to be paid. An incentive, on the other hand, is typically paid for the achievement of specific pre-determined performance criteria, with the amount paid being linked directly to performance against the incentive metrics. The terms bonus and incentives are used interchangeably in most organisations e.g., an organisations short-term incentive plan (STIP) may well be known as the “annual bonus.”. In this blog, I am speaking about incentives, i.e., real variable pay that is contingent on organisation/employee performance.

So why all the heat and noise in some organisations about incentives? There are many reasons, all of which have varying degrees of validity. Let’s examine the key ones.

1. Philosophy: some organisations just do not believe that incentives work and believe there are more effective ways to motivate employees. Personally, I think this is nonsense, and if you disagree, think about how incentives influence sales employee behaviour in your organisation!  Other organisations believe that incentives may work but believe that the adverse consequences on employee behaviour outweigh the potential upside. I believe this is the wrong way to think about incentives, but I understand why some organisations take this view, as indeed there can be unintended adverse impacts on employee behaviour. I also believe it is perfectly valid for an organisation to decide not to utilise incentives if they have thought through the consequences and implications for their reward proposition and have taken alternate steps to ensure they have a compelling and competitive reward proposition.
2. Rewards Strategy: some organisations have thought through how they want to prioritise their rewards proposition and consciously decide not to utilise incentives and/or decide to use incentives in a very targeted way, e.g., only senior managers and sales employees are eligible for incentives. Organisations that do not use broad-based incentives will focus on differentiating themselves from their competitors via other elements of rewards, e.g., higher base pay, better benefit programmes or market-leading career opportunities.
3. Organisation culture: some organisations are just not suited to utilising variable pay because of their culture. They may feel that they are already paying employees enough, or they may feel that incentives do not influence behaviour, or they may not want to share the wealth with employees, or they are not ready to link pay to performance. These views are all valid, provided that the organisation is prepared to live with the consequences of not utilising variable pay. Organisation culture is about behaviour and organisations tend to get the behaviour they reward. Another aspect of corporate culture that reduces the appetite for variable pay is the need for transparency on how incentives are calculated and transparency on eligibility for incentives by employee category. Some organisations are simply uncomfortable with this level of transparency and thus shy away from utilising incentives. Given the direction of travel on pay transparency, this thinking is a bit like arguing with gravity! It is only a matter of time until all organisations will be dragged kicking and screaming into the limelight over their pay practices. 
4. Incentive pay is too hard to get right; this view does have some validity. It is relatively easy to design incentives programmes, but it is quite another matter to operationalise them effectively within your organisation. Key challenges include ensuring managers and employees fully understand the incentive program and key performance metrics, and ensuring managers can clearly explain the linkage between employee’s jobs and behaviors and their incentives, i.e., how the employee can impact the performance metrics. Organisations that are unwilling to put substantial time and effort into effectively communicating incentives within their organisation would be better served if they abandoned using incentive programmes. Organisations will only leverage the impact of incentives if they put the time and effort into deploying them correctly.

Having dealt with the issues associated with incentives, I will finish by outlining key requisites for effective variable pay (incentives) in organisations including:

1. Senior management must internalise that the key goal of incentives is to improve organisational performance. Incentives clarify the most important goals for employees and managers. Incentives provide a framework for goals to be cascaded from the organisation to the business unit and to the employee base. Incentives help to foster employee engagement by providing a framework for feedback and enabling employees to see how they contribute to or make a difference in the organisation. Incentives also acknowledge desired behaviors and results and provide positive reinforcement to employees. Senior management must see the value of deploying incentives to achieve business objectives before it is worth the organisation's time to implement incentives.
2. Organisation's readiness for incentives. Even if an organisation has an appetite for incentives, some organisations still need to consider the best timing for the introduction or revision of incentives to ensure the timing is right and that the approach to incentives is properly integrated with the wider rewards strategy.  If an organisation is introducing incentives or changing incentive practices, the incentive should be tied to clearly demonstrable results that the organisation is looking to achieve and to timelines associated with the achievement of these results.
3. Performance must be measurable. This seems obvious and common sense, but common sense is not always common!  Incentives are paid based on performance against pre-determined metrics. These metrics must be communicated and widely understood. Organisations need to be able to measure performance systematically on a regular basis, be it monthly, quarterly, or annually. It is not uncommon to see organisations struggle to collect data in a timely manner to measure incentive performance.
4. Costs and resource availability. The cost of incentives needs to be calculated and modelled so that the organisation is getting a robust return on investment from the incentive programme. The introduction of a new or revised incentive can strain resources in any organisation. The actual design and approval of the incentive programme are generally only approximately 20% of the work. The other 80% of the work and time is spent on effective communication with managers and employees and ensuring the effective administration and governance of the incentive once it is in place.
5. Employee engagement. The normal rules of employee engagement apply to incentives as they apply to the other reward elements, i.e., employees must perceive that their incentives are fair relative to internal and external peers doing similar jobs.
6. Consider external factors.  As well as the internal factors mentioned above, organisation also need to consider a myriad of external factors. These include the need to keep pace with the labour market in terms of offering a compelling reward proposition. Organisations need to keep abreast of what is happening in their industry, including relative labour costs. Organisations also need to ensure they can adhere to legal or regulatory issues, both current and impending.

In conclusion, while incentives are no panacea to the performance management challenges organisations face, they can be a useful tool in an organisations total rewards proposition to ensure optimal organisational performance. The degree of success organisations will achieve using incentives will be determined by how effectively the incentives are designed, communicated, managed, and administered. 

“You cannot be everything to everyone. If you decide to go north, you cannot go south at the same time.”  Jeroen De Flander

Based on thirty-plus years’ experience as a rewards practitioner, below are some essential building blocks for an organisation to create a compelling rewards strategy.

1. Understand what "strategy" is and how tough it is to create an effective one. Personally, I have found Michael Porter's strategy descriptions to be the most instructive and practical.  Michael’s description of strategy includes, “Strategy is about making choices and trade-offs; it’s about deliberately choosing to be different. The essence of strategy is choosing what not to do. Strategy is about setting yourself apart from the competition. It’s not a matter of being better at what you do; it’s a matter of being different at what you do. Strategy 101 is about choices: You can’t be all things to all people.  A strategy must have continuity. It can’t be constantly reinvented.” The key takeaways from Michael’s descriptions for rewards practitioners are:

• You must choose or prioritise the elements of your reward proposition that comprise your reward strategy. You need to choose the reward elements you are going to excel at.
• Your reward proposition must differentiate you in the market. Yes, understanding what your market is doing in terms of rewards practices is important, but it is only of strategic importance if you use the data to differentiate your organisation's reward proposition and
• You must have the resilience to persuade your stakeholders that the proposed rewards strategy is the right one for the business and organisation culture.

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2. Ensure your reward strategy is effectively integrated and aligned. This is easier said than done, and heavy lifting will inevitably be required to ensure effective alignment. In the first instance, the rewards strategy needs to be aligned with business objectives and the organisations business model. Both business objectives and reward objectives should be prioritised to ensure you avoid trying to be all things to all people. The rewards framework developed needs to be affordable for the business model over the medium to long term. In addition, the rewards strategy needs to be aligned with the organisation culture. Generally, I believe organisation culture is about behaviour and organisations get the behaviour they reward. This is a key linkage to get right. If managers and employees lived experience in the organisation is that rewards are not aligned with the behaviour and values of the organisation they will just ignore the propaganda about organisation culture. Finally, the rewards strategy needs to be aligned or integrated with the overall HR strategy to ensure all the factors that influence employee attraction, engagement, and retention are fully integrated.

 
3. Avoid or at least manage the potential pitfalls enroute to the development and agreement of your rewards strategy. In the first instance, make sure your proposed strategy differentiates you from the competition. As reward practitioners, we are genetically disposed to having a good handle on what the marketplace is doing and sometimes feel we are missing a trick if we are not doing everything other organisations are doing. This is a trap. We need to have the courage of our convictions to provide reward programmes that differentiate us from the market. Inevitably, we cannot do everything we want to do due to cost constraints, so you should prioritise reward programmes that will have the greatest impact on your business objectives and your desired organisation culture. Another potential pitfall to avoid is getting off track as you work through stakeholder engagement in your organisation. Stakeholders will invariably have strong views on rewards and often believe they know more about rewards than anyone else! Do not take this personally. This thinking is a function of the relative importance of rewards within your organisation. You will need discipline and resilience in equal measure to work through the myriad of stakeholder’s meetings to agree on the implementation of a compelling rewards strategy. Another potential pitfall is chasing the “latest thinking," “new craze," and “best practice” and believing you will find the solution to the development of your rewards strategy externally. My experience is that the organisations that have the best reward strategies are the ones that prioritise aligning their reward proposition to both their business objectives and organisation culture.

4. Communicate, communicate, and communicate. You will not have a compelling rewards strategy unless, in the first instance, all people managers understand it. This requires more than a few PowerPoint slides and a frequently asked questions document. People managers need to understand how the rewards strategy is integrated and aligned with the business strategy and organisation culture. They also need to understand the trades-offs and prioritisation made along the way to develop the strategy. This necessitates dialogue with managers. Assuming you get all people managers (or at least most of them) on board with your rewards strategy, you are 90% plus of the way to having all employees (or at least most of them) bought into the organisation rewards strategy. If an organisation is not prepared to make the investment in the communication of its rewards strategy, the rewards strategy will fail. 

5. What gets measured gets done. Measuring the success of a rewards strategy goes beyond simple employee attraction and retention rates. Organisations must delve into metrics that reflect employee engagement, performance management, the organisation's financial performance, and overall employee satisfaction. A well-designed rewards strategy should have regular assessments to ensure its continued effectiveness. 

In conclusion, the question of whether organisations truly understand what a rewards strategy is remains a critical inquiry in the realm of human resources. Beyond surface-level reward programmes, a genuine rewards strategy is a nuanced and dynamic approach that aligns with business objectives, communicates transparently, adapts to changing workforce preferences, and embraces technology. As businesses navigate the complexities of the modern workplace, a deeper understanding and implementation of rewards strategies will be instrumental in securing not only top talent but also fostering an organisation culture of sustained business success and employee engagement.