Mercer’s IPE: From Surveys to Global Leveling Dave BorrebachLynne DelewskiBill Strobl

Mercer’s IPE: From Surveys to Global LevelingDave Borrebach Lynne Delewski Bill Strobl

Mercer Human Resource Consulting 2

Objectives of the Presentation

Help you understand Mercer’s International Position Evaluation (IPE) system

Describe why IPE is a critical component of Mercer surveys and to the users

Highlight the links between IPE and market data in the survey results

Demonstrate the relationship between surveys/IPE and global leveling


The Process: Job Evaluation is a critical part of surveys and the foundation for Global Leveling

We conduct individual meetings with participating companies to:– Understand the organization and its structure– Identify, select, match the benchmark jobs– Evaluate the job using IPE’s four factors which yields a total points score for

each factor – Convert total points (the sum of the points from each of the four factors) to IPE

Position Class– For Hay users (optional step): Compare/check against Hay Grades– Add the related compensation elements and submit the data– Access survey results either based on pure market data by job or by Position

Class or a combination using the power of PayMonitor– Review market competitiveness within a country, across a region, around the

world– Review PCs within a country, across a region, around the world– Make informed decisions to align with the company’s business strategy

Now let’s look at each of these steps….


Why Position Evaluation ?

Systematic and easy process for identification of differences between positions all over the organization (objectivity).

The IPE system is an analytic point system with four factors and 10 dimensions (common terminology).

Resulting in a Position Class expressing the relative value of a position for the Organization (appreciation).

The IPE system is used as a tool for leveling and for internal and external comparisons (equity).

The Methodology is advanced, but easy to apply and understand (easily communicated).


IPE Overview

Swift evaluation of positions– Only four factors and assisted by standard benchmark evaluations– High-quality access to global market data

Focus on business related dimensions– Impact and contribution to business unit results– Communication and Innovation should additionally be rewarded– Required Knowledge, how and where it is applied

Facilitate Organizational analysis– Clarify relativities among positions– Complimentary, not an alternative, to competency assessment and

performance management

Evaluate job profiles easily– Strong market correlation– Common language for all surveys in all regions


IPE Overview: The Four Primary Factors

Position

Organization

1. Impact

Impact

Contribution

Organization size is based on a monetary scale such as sales and assets, range of activity and number of employees

Organization size is based on a monetary scale such as sales and assets, range of activity and number of employees

Assess nature of impact a position has on the organization Assess nature of impact a position has on the organization

Assess relative contribution that a position holder makes in the context of Impact

Assess relative contribution that a position holder makes in the context of Impact

2. Communication

Communication

Frame

Assess the nature of required communication ability Assess the nature of required communication ability

Determine both organization frame and nature of interests of communication contacts

Determine both organization frame and nature of interests of communication contacts

4.Knowledge

Knowledge

Team

Breadth

Measure the nature of knowledge required to accomplish objectives and create value

Measure the nature of knowledge required to accomplish objectives and create value

Assess how the knowledge is applied in teams Assess how the knowledge is applied in teams

Assess the geographic context in which knowledge is applied

Assess the geographic context in which knowledge is applied

3. Innovation

Innovation

Complexity

Assess requirements to identify, make improvements to, or develop procedures, services or products

Assess requirements to identify, make improvements to, or develop procedures, services or products

Assess level of complexity a position holder deals with Assess level of complexity a position holder deals with

An additional Risk factor is available when hazard conditions in the role potentially can harm the incumbent


Impact: Review the Structure and Size the Organization

Economic Volume

Review of the Value Chain

Nature ofOrganization

President and Chief Executive Officer

Chief Human Resources Officer

Chief Financial Officer

Corporate Secretary Chief Information Officer

Regional DirectorAsia / Pacific

Regional DirectorEurope

Regional DirectorLatin America

Regional DirectorNorth America

Managing DirectorGermany

Managing DirectorFrance

Managing Director Italy

Managing DirectorGreat Britain

Managing DirectorScandinavia

Director Manufacturing Director Finance Director LogisticsDirector

Human ResourcesDirector

Sales & Marketing

Corporation

Region

BusinessUnits

TotalNumber of Staff

Capital Intensiveversus

People Intensive

BasicR&D

4.0

Engineer

1.5

ProcureLogistics

2.0

Applied R&D

2.0

Produce

2.0

ApplyAssemble

2.5

Market

1.0

Sales

1.5

Distri-bution

1.5

Service

2.0

BasicR&D

4.0

BasicR&D

4.0

Engineer

1.5

Engineer

1.5

ProcureLogistics

2.0

ProcureLogistics

2.0

Applied R&D

2.0

Applied R&D

2.0

Produce

2.0

Produce

2.0

ApplyAssemble

2.5

ApplyAssemble

2.5

Market

1.0

Market

1.0

Sales

1.5

Sales

1.5

Distri-bution

1.5

Distri-bution

1.5

Service

2.0

Service

2.0

AdjustedEconomic

Size

AdjustedEconomic

Size

(US$ 000,000)

From To From To1 53 0 10 2 53 106 10 25 3 106 212 25 50 4 212 424 50 100 5 424 848 100 200

6 848 1,696 200 400 7 1,696 3,391 400 800 8 3,391 5,935 800 1,400 9 5,935 10,386 1,400 2,500 10 10,386 18,176 2,500 4,000

11 18,176 31,808 4,000 7,000 12 31,808 55,665 7,000 12,000 13 55,665 83,497 12,000 18,000 14 83,497 125,245 18,000 27,000 15 125,245 187,868 27,000 40,000

16 187,868 281,802 40,000 60,000 17 281,802 422,703 60,000 100,000 18 422,703 634,055 100,000 150,000 19 634,055 951,083 150,000 225,000 20 951,083 225,000

Degree Level

Economic Size Number of EmployeesNet Sales/Assets (Full Time)


Change of the organization’s overall philosophy (vision / mission / values):

Change of the long-term strategy and company goals (strategic development):

Change of tactical plans to provide new developments based on corporate decisions and plans (milestones):

Objective-setting and securing operational results (checkpoints):

Delivery of own output according to specific targets within own area of activity:

Visionary

Strategic

Tactical

Operational

Delivery

Factor 1: Impact


Level of Contribution

SomeLimited SignificantDirect Major

Hard to discern contribution to achievement of concrete results

Steer the course of action that

determines the achievement of

results

Quite marked contribution with

authority of a frontline or primary

nature

Predominant authority in

determining the achievement of key

results

Easily discernible contribution that

usually leads indirectly to

achievement of results

- - - = + ++

Level of Contribution Modifies Impact


Factor 2: Communication

COMMUNICATION

Convey

Adapt & Exchange

Influence

Negotiate

NegotiateStrategically

Nature Desired Outcome+=Communicate by statement,

suggestion, gesture, or appearance

Understanding of information

Reach agreement through flexibility and compromise

Effect change without direct exercise of command

Acceptance of concept/practice/approach

Come to agreement by managing communications through

discussions and compromise

Acceptance of completeproposal by compromise/discussion

Manage communications of great importance within an integrated framework and/or with long-term

implications

Acceptance ofstrategic agreement

Comprehension of facts/ practices/policies


Responsibility for communications within and outside the organization by any means or media

– First, determine whether the communication is internal or external

– Then, determine whether the interests are shared or divergent

External SharedInternal Shared

FRAMEExternal DivergentInternal Divergent

External SharedInternal Shared

FRAMEExternal DivergentInternal Divergent

Modify by Most Difficult Communication Context


Defined

Realign with Defined

Check

OriginalModified

ModifyOriginal

Improved

Improve

From abstract idea

To a new direction

Create/Conceptualize

New & Unprecedented- to take a quantum leap

Breakthrough

Defined

Follow

Factor 3: Innovation


Modify Innovation by Complexity

DifficultDefined

COMPLEXITY

Complex

Either operational, financial or human

- easily understood

Either operational, financial or human

- Not easily understood

Any two of three dimensions i.e.

Operational, Financial and Human

All three dimensions - Operational, Financial

and Human

Involved directly in all three dimensions

Multi Dimensional


Factor 3: Knowledge?

In-depth management knowledge across several line and support functions or businesses

1

2

3

4

5

6

8

Broad knowledge of several, different areas across functions

Broad management knowledge across several functional areas or businesses

Organization expert in the profession

7 Industry expert in the profession

In-depth management knowledge in most functions across several businesses of the corporation

Mastery of specific professional discipline at expert level

Fundamental know-how within narrow boundaries

Broader theoretical or advanced technical/operational know-how

Advanced knowledge of specific discipline within one’s own job area

Specialized commercial,technical or operational know-how

Specialist Generalist


Teams ManagerTeam LeaderTeam Member

Context of Teams

and and

Modify Knowledge by Context of Teams


Breadth Considers the Geographical Context in Which Knowledge is Applied

Geographic context in which knowledge is applied

RUSSIA

ASIA

EUROPE

MIDDLE EAST

AFRICA

USA

SOUTH

AMERICA

AUSTRALIA

CANADA

ANTARCTICA

GREENLAND

Domestic = 1

Region = 2

Global = 3

1

2

3


The Position Evaluation SummaryEngineering Manager

Impact Size 4 189Impact 4Contribution Level 4

Communication Communication 4 80Frame 3

Innovation Innovation 4 75Complexity 3

Knowledge Knowledge 5 158Teams 2Breadth 2

Risk (Optional) Risk 0 0Environment 0

TOTAL POINTS 502 POSITION CLASS 59

Degree Points

Marked contribution to defining the business strategies of a corporatebusiness unit or organization, but not predominant authority –- 21 to 30%

Convince others in the organization to accept complete proposals and programs where there may be little interest in cooperating or participating

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

Lead a team through expertise in most or all areas within a function or mastery of a specific professional discipline

Physical and mental environment under normal conditions with no risk of inconvenience or industrial injury


Position Class Conversion Table

Position Class

Position Class

Position Class

26 - 50 40 426 - 450 56 826 - 850 72

51 - 75 41 451 - 475 57 851 - 875 73

76 - 100 42 476 - 500 58 876 - 900 74

101 - 125 43 501 - 525 59 901 - 925 75

126 - 150 44 526 - 550 60 926 - 950 76

151 - 175 45 551 - 575 61 951 - 975 77

176 - 200 46 576 - 600 62 976 - 1000 78

201 - 225 47 601 - 625 63 1001 - 1025 79

226 - 250 48 626 - 650 64 1026 - 1050 80

251 - 275 49 651 - 675 65 1051 - 1075 81

276 - 300 50 676 - 700 66 1076 - 1100 82

301 - 325 51 701 - 725 67 1101 - 1125 83

326 - 350 52 726 - 750 68 1126 - 1150 84

351 - 375 53 751 - 775 69 1151 - 1175 85

376 - 400 54 776 - 800 70 1176 - 1200 86

401 - 425 55 801 - 825 71 1201 - 1225 87

Total point range Total point range Total point range

Position Class is the “common currency” that links

into Compensation Surveys in more than 60 countries


Mercer IPE to Hay: Correlation TableNote: These are guidelines not exact correlations

IPE Position

Class

IPE Points/

midpoint

Hay Points/

midpointHay min

Hay max

IPE Position

Class

IPE Points/

midpoint

Hay Points/

midpointHay min

Hay max

72 838 3168 3005 - 3331 56 438 585 553 - 61771 813 2857 2710 - 3004 55 413 524 496 - 55270 788 2576 2444 - 2709 54 388 469 443 - 49569 763 2323 2203 - 2443 53 363 419 396 - 44268 738 2094 1985 - 2202 52 338 374 353 - 39567 713 1887 1789 - 1984 51 313 333 315 - 35266 688 1700 1611 - 1788 50 288 297 280 - 31465 663 1531 1451 - 1610 49 263 263 248 - 27964 638 1378 1306 - 1450 48 238 233 220 - 24763 613 1241 1176 - 1305 47 213 206 194 - 21962 588 1116 1058 - 1175 46 188 182 171 - 19361 563 1004 951 - 1057 45 163 160 150 - 17060 538 902 854 - 950 44 138 139 130 - 14959 513 810 767 - 853 43 113 119 109 - 12958 489 728 689 - 766 42 88 98 88 - 10857 463 653 618 - 688 41 63 77 68 - 87


Example Output by IPE Level…also a starting point for developing global grades/bands


Further Analysis to Administer and Maintain Global Grades/Bands

Maintain local banding parameters

Establish market reference rates

Slot jobs into bands

Model alternative structures

Provide management reporting


The Survey Results

Let’s look at the survey results:

Job-based market results

IPE-based market results

Combination Job/IPE market results


Survey Results: Brand/Product ManagerActual Market Data by Job


Survey Results: Actual Market Data by IPE Position Class


Survey Results: Brand/Product ManagerActual Market Data by IPE Position Class 53 Only


Survey Results: Regressed Statistics by Function


Survey Results: IPE Position Class by Job Overview


Summary Statistics: Actual Market and Regressed Market

Actual Market Data Regressed Market Data

Brand/Product Mgr All Incs PC 49-56

Brand/Product Mgr

PC 53 Only

PC 49-56

Sales & Mktg

PC 49-56

All Functions 25th 45,709 45,651 50th 52,174 52,147 Average 53,077 51,403 38,570 – 74,506 40,371 – 75,083 75th 59,978 56,544


From Surveys to Global Leveling

Let’s look at some basic reports on how to use the survey results to analyze your organization’s existing levels across jobs and across the world


First Step Towards Global Leveling: Review Your Organization’s Position Classes across countries: By Position Class

Country A Country B Country C Country D

IPE Level

75 GM

74

73 GM

72

71 GM

70

69

68 CFO CFO CFO

67 CFO

66

65

64 Controller

63 Controller Controller

62


First Step Towards Global Leveling: Review Your Organization’s Position Classes across countries: By Job

County A

County B

County C

County D

Job

CFO PC 62

Controller PC 59 CP 58 PC58 PC57

Sr Accountant PC 50 PC 49

Accountant PC 48 PC 48 PC 48 PC 48


In Summary….

Mercer’s surveys (US Consumer Goods Pilot Survey, TRS, and the Forum surveys) include IPE, that is, the jobs are evaluated and assigned Position Classes.

Outside the US, participating companies evaluate their jobs together with a Mercer consultant.

For the 2005 US Pilot Consumer Goods Survey, standard evaluations are being applied to all jobs based on reported company size information.

If the group decides to use Mercer in 2006, we envision each company would have the option of evaluating their jobs for their organization.

The IPE Position Classes are included in PayMonitor and can be exported for the review across countries process (including US Pilot Survey)

For those companies currently in the Consumer Goods Forums around the world, this type of analysis for survey jobs can be performed either by the organization or by a Mercer consultant

With this information your company can either review, reinforce, or ensure compliance with your existing global strategy around levels and pay OR develop and implement a global pay and global leveling infrastructure


Questions?

Documents

Mercer’s IPE: From Surveys to Global Leveling Dave BorrebachLynne DelewskiBill Strobl