July 2008

Introduction to Mercers International Position Daniele Giugno, Geneva Evaluation System

www.mercer.com

Work Value Measurement measure, and value differences in work

Less Complexity

Greater Complexity

Whole Job Ranking

Description
Jobs ranked using general criteria of worth to organisation (e.g., importance or complexity)

Classification (Roles)
Classes/grades defined using aspects of job content; jobs assigned to classes/grades

Market Pricing & Slotting

Market rates established for benchmark jobs; nonbenchmark jobs slotted in salary structure

Standardized Point Factor

Points assigned to jobs based on factors, degrees and points. Universal factors and weights

Customized Point Factor

Points assigned to jobs based on factors, levels and factor weights Customized factors and weights to client

Strengths

Simple Easy to maintain

Easy to explain Easy to modify Adaptable to job families

Relationship to market values Credible

Can quickly compare jobs across functions and organisations. Common links to market

Can compare jobs across functions Is perceived to be objective and consistent

Limitations

Potential for bias May over emphasize a single factor

Unusual jobs may be forced Potential for bias

Interpretation needed to slot jobs Difficult if poor data or fast changing market Volatile

May seem inflexible Administration may seem to be a barrier

Effort required to develop factors Much effort to administer and implement

Mercer

The Five Factors

Organisation

Organisation size is determined by monetary scale such as sales and assets, range of activity and number of employees. Assess nature of impact a position has on the organisation.

1. Impact

Impact

Contribution

Assess relative contribution that a position holder makes in the context of Impact. Assess the nature of the necessary communication ability required by a position. Determine both organisation frame and nature of interests of communication contacts.
Assess the requirements to identify, make improvements to, or develop procedures, services or products Assess level of complexity that a position holder must deal with. Measure the nature of knowledge required in the job to accomplish objectives and create value. Assess the way the knowledge is applied. Assess the breadth (geographic context) in which the knowledge is to be applied. Assess the exposure to risk of mental or physical injury in the job. No points are yielded if work conditions meet international standards. Assess level of exposure from the working environment.

2. Communication

Communication Frame

Innovation

Position

3. Innovation

Complexity

Knowledge

4. Knowledge

Team Breadth

5. Risk

Risk Environment

Mercer

Organisation Sizing

The Organisation Context include at least one line function and two service functions. is operational enough to produce added value.
Basic R&D Applied R&D Engineer Procure Logistics Produce Apply Assemble Market Sales Distribution

Service

Mercer

Impact
Level of Contribution
1
NATURE OF IMPACT 1 Delivery Limited 2 Some 3 Direct

4
Significant

5 Major

Operational

Marked contribution to defining the direction for new products, processes, standards or operational plans based upon business strategy, with a significant mid-term impact on business unit overall results -21 to 30%

Tactical

Strategic

Visionary

Mercer

Communication
FRAME
1 COMMUNICATION 1 Convey Internal Shared 2 External Shared 3 Internal Divergent 4 External Divergent

Convince others within the organisation that are skeptical or unwilling to accept new concepts, practices, and approaches

Adapt & Exchange

Influence

Negotiate Negotiate Long term

Mercer

Innovation
COMPLEXITY
1 INNOVATION 1 Follow Defined 2 Difficult 3 Complex 4 Multi-Dimensional

Check

Analyze complex issues and significantly improve, change or adapt existing methods and techniques.

Modify
Improve Create / Conceptualize Scientific/Technical Breakthrough

Mercer

Knowledge
TEAMS
1 KNOWLEDGE 1 2 3 4 5 6 7 8 Limited Job Knowledge Basic Job Knowledge Broad Job Knowledge Global Expertise Professional Standard Organisational Generalist / Functional Specialist Broad Practical Experience / Functional Preeminence Broad and Deep Practical Experience
Lead a team through application of broad knowledge of one job area or basic knowledge of several related job areas

2 Team Leader

3 Teams Manager

BREADTH Domestic

Team Member

Regional

Mercer

Risk
Environment Risk
0 Normal 1 Low Exposure

2 Moderate Exposure

3 High Exposure

Mental

Injury

Disability

Normal working conditions. Physical and/or mental work in an environment where international standards of safety apply.

Mercer

Position Class Conversion Table

Position Class 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Position Class 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 Position Class 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87

Total point range 26 51 76 101 126 151 176 201 226 251 276 301 326 351 376 401 50 75 100 125 150 175 200 225 250 275 300 325 350 375 400 425

Total point range 426 451 476 501 526 551 576 601 626 651 676 701 726 751 776 801 450 475 500 525 550 575 600 625 650 675 700 725 750 775 800 825

Total point range 826 851 876 901 926 951 976 1001 1026 1051 1076 1101 1126 1151 1176 1201 850 875 900 925 950 975 1000 1025 1050 1075 1100 1125 1150 1175 1200 1225

Mercer

Major IPE applications

Application in Human Resources Management
Organisational analysis Remuneration management Recruitment Promotion and succession planning HR information HR controlling HR audits

IPE deliverables
A clear ranking of positions that is internally consistent
A first analysis of the organisational effectiveness A global comparison of relations between positions A starting point to establish position / competency

profiles
A database to support career planning and succession An objective reference to solve title issues A reliable base for an equitable salary structure

A tool that facilitates market benchmarking

Mercer

10

Mapping of Position Evaluation Results

IPE Class

Unit 1

Unit 2

Unit 3

Unit 4

550

532 PLANT MANAGER Van Gogh

538 PLANT MANAGER Rubens

536 DEVELOPMENT MANAGER Rembrandt

546 QUALITY DIRECTOR Pinturicchio

60

526 525 522 PLANT MANAGER A Magritte 517 ADMINISTRATION MANAGER 512 De Vlaeminck PLANT MANAGER B 507 Kandinsky MAINTENANCE MANAGER Klee 497 PROJECT MANAGER Klimt 497 SALES MANAGER Raffaello 492 PERSONNEL MANAGER Michelangelo 481 EDP MANAGER Leonardo 472 PROMOTION MANAGER Frangelico 461 PRODUCTION MANAGER Hobbema 511 LABORATORY MANAGER Chagall 507 PRODUCTION MANAGER Matisse 501 TECHNICAL MANAGER Czanne 516 PERSONNEL MANAGER Miro 506 SECTION MANAGER Picasso 516 FINANCE DIRECTOR Gheduzzi

59

501

500

58

476

475

57

497 SERVICE MANAGER Schiele 491 PERSONNEL MANAGER Pozzo 486 SALES MANAGER Goya 481 ADMINISTRATION MANAGER Velasquez 465 ORGANISATION MANAGER Lippi 455 MARKETING MANAGER Giotto

476 FINANCE MANAGER Borromini

466 COORDINATOR Van Eyck 451 PROMOTION MANAGER Canaletto

471 SERVICE MANAGER Dali

451

Mercer

11

Problems with title comparisons

TYPE OF COMPANY

COMPANY A
Sales company

COMPANY B
Manufacturing and Sales company

Turnover

2 million

2 million

Organisation level

MD

MD

Admin

Responsible for

Accounting Office Service

Group Treasury Group Controller Group Audit Information Systems

12

Mercer

Structure Analysis
Position Class L L-1 L-2 L-1 L-1 L-2 L-3 L-3 L-1

L-2

L-2

L-2
L-2 L-2 L-2

Mercer

13

The Position and the Person

Position Class

Mercer

14

Promotion and consequences

Internal Grading

Reference Salary

V IV

290 220 170 X Risk X Challenge X Recognition X

X Utopia

III
II I

130
100

Promotion steps following the internal grading Promotion is based on competencies, not on performance

Mercer

15

Market Pay Position

Euro

75

INTERNAL REFERENCE

50

25

Position class

Mercer

16

Benchmarking

Six levels
Visionary Strategic Tactical Operational Delivery L L-1 L-2 L-3 L-4

Benchmark positions 100% 70% 50% 30% 10%

Typical headcount 5 20 75 250 650

Organization benchmarks 5 15 40 75 65

Total

25%

1000

200

Mercer

17

Position Evaluation process

Executive Interviews with focus on direct reports

Focus Groups to evaluate Positions at Operational and Delivery levels

Mercer 18

Project Management

Mercer
Know-how transfer and guidance Executive committee Approve evaluations

Organisation / Area representatives + HR department

Project team Assure internal equity

Mercer
Quality review

Focus groups HR department + project team member Prepare benchmark evaluations Define internal terminology

Mercer
Quality review

Mercer

19

Communication
Not aimed at cutting manpower /salaries Looking at Position; not Position-holder Need to know market position Using well tested evaluation methodology

Fairly and consistently evaluates jobs

Can compare all types of jobs Evaluations carried out by those who are knowledgeable of jobs Position Description not the only source of job data

Mercer

20

Position Evaluation should focus on the Position not on the Person

Mercer

21

Mercer Global Offering

IPE3 Tool Kit

Consulting

Communication

Technology

Information Services
Total Remuneration Surveys Bespoke Surveys Benefits and valuation methodology LTI methodology Market Pricing PayMonitor Global HR Monitor Mercer Membership

Provide IPE License Project Planning eIPE Unlimited Size of organisations IPE3 System Manual Migrate existing IPE2 & Consulting evaluations to IPE3 Handbook Role Clarification Internal IPE3 Guide Executive Position Develop and conduct evaluations Internal training Establish new Global Provide data Benchmarks collection and Consolidate and peer other support tools review evaluations Briefing of Mercer Redefine relationship Consultants between position class and grade level

Understand Analyse Technology behavioural needs and current tools objectives Outline possible Assess the audience Technology options Create communication Support decision process strategy and means towards new Technology Roll out the Provide IT platform communications and process specific tools strategy - Mercer ePRISM - Mercer MerritNET - Mercer HR Suite

Project Management

Mercer

22

www.mercer.com