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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

Standardized
Point Factor

Customized
Point Factor

Description

Market Pricing
& Slotting

Jobs ranked using


general criteria of worth
to organisation (e.g.,
importance or
complexity)

Classes/grades defined
using aspects of job
content; jobs assigned to
classes/grades

Market rates established


for benchmark jobs;
non-benchmark jobs
slotted in salary structure

Points assigned to jobs


based on factors,
degrees and points.
Universal factors and
weights

Points assigned to jobs


based on factors, levels
and factor weights
Customized factors and
weights to client

Strengths

Classification
(Roles)

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

Whole Job
Ranking

Greater Complexity

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

1.
Impact

Impact
Contribution

2.
Communication

Position

3.
Innovation

4.
Knowledge

5.
Risk

Mercer

Communication
Frame

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.
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.

Innovation

Assess the requirements to identify, make improvements to, or


develop procedures, services or products

Complexity

Assess level of complexity that a position holder must deal with.

Knowledge

Measure the nature of knowledge required in the job to accomplish


objectives and create value.

Team

Assess the way the knowledge is applied.

Breadth

Assess the breadth (geographic context) in which the knowledge is to


be applied.

Risk

Assess the exposure to risk of mental or physical injury in the job. No


points are yielded if work conditions meet international standards.

Environment

Assess level of exposure from the working environment.

Organisation Sizing

The Organisation Context


include at least one line function and two service functions.
is operational enough to produce added value.
Basi
c
R&D

Mercer

Applie
d
R&D

Procure
EngineerLogisticsProduc
e

Apply
Market Sale
Assembl
s
e

Distributio
n

Servic
e

Impact
Level of Contribution
NATURE OF
IMPACT
1

Delivery

Operational

Tactical

Strategic

Visionary

Mercer

Limited

Some

Direct

Significant

Major

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%

Communication
FRAME
COMMUNICATION
1

Convey

Adapt & Exchange

Influence

Negotiate

Negotiate
Long term

Mercer

Internal Shared

External Shared

Internal Divergent

External Divergent

Convince others within the organisation that are


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

Innovation
COMPLEXITY
INNOVATION
1

Follow

Check

Modify

Improve

Create /
Conceptualize

Scientific/Technical
Breakthrough

Mercer

Defined

Difficult

Complex

Multi-Dimensional

Analyze
Analyzecomplex
complexissues
issuesand
andsignificantly
significantly
improve,
change
or
adapt
improve, change or adaptexisting
existingmethods
methods
and
andtechniques.
techniques.

Knowledge
TEAMS
KNOWLEDGE
1

Limited
Job Knowledge

Basic
Job Knowledge

Broad Job Knowledge

Expertise

Professional
Standard

Organisational Generalist
/ Functional Specialist

Broad Practical Experience


/ Functional Preeminence

Broad and Deep


Practical Experience

Mercer

Team Member

Team Leader

Teams Manager

BREADTH
Domestic

Regional

Global

Lead
Lead aa team
teamthrough
throughapplication
applicationof
of
broad
knowledge
of
one
broad knowledge of one job
jobarea
area or
or
basic
knowledge
of
several
related
basic knowledge of several relatedjob
job
areas
areas

Risk
Environment
Risk

Mercer

Normal

Mental

Injury

Disability

1
Low
Exposure

2
Moderate
Exposure

3
High
Exposure

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

Position Class Conversion Table


Total point range

Mercer

Position
Class

Total point range

Position
Class

Total point range

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

10

Major IPE applications

IPE deliverables

Application in Human
Resources Management

A clear ranking of positions that is internally consistent

Organisational analysis

A first analysis of the organisational effectiveness

Remuneration
management

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

Recruitment
Promotion and succession
planning
HR information
HR controlling
HR audits

A tool that facilitates market benchmarking

Mercer

11

Mapping of Position Evaluation Results

IPE
Class

550

Unit 1

Unit 2

Unit 3

Unit 4

532 PLANT MANAGER


Van Gogh

538 PLANT MANAGER


Rubens

536 DEVELOPMENT MANAGER


Rembrandt

546 QUALITY DIRECTOR


Pinturicchio

522 PLANT MANAGER A


Magritte
517 ADMINISTRATION
MANAGER
512 De Vlaeminck
PLANT MANAGER B
507 Kandinsky
MAINTENANCE MANAGER
Klee

511 LABORATORY MANAGER


Chagall
507 PRODUCTION MANAGER
Matisse
501 TECHNICAL MANAGER
Czanne

516 PERSONNEL MANAGER


Miro
506 SECTION MANAGER
Picasso

516 FINANCE DIRECTOR


Gheduzzi

497 PROJECT MANAGER


Klimt
497 SALES MANAGER
Raffaello
492 PERSONNEL MANAGER
Michelangelo
481 EDP MANAGER
Leonardo

497 SERVICE MANAGER


Schiele
491 PERSONNEL MANAGER
Pozzo
486 SALES MANAGER
Goya
481 ADMINISTRATION
MANAGER
Velasquez

476 FINANCE MANAGER


Borromini

472 PROMOTION MANAGER


Frangelico
461 PRODUCTION MANAGER
Hobbema

465 ORGANISATION MANAGER


Lippi
455 MARKETING MANAGER
Giotto

466 COORDINATOR
Van Eyck
451 PROMOTION MANAGER
Canaletto

60
526
525
59
501

500
58
476

475
57

471 SERVICE MANAGER


Dali

451

Mercer

12

Problems with title comparisons

COMPANY B

COMPANY A

TYPE OF COMPANY

Sales company

Turnover

Manufacturing and
Sales company

2 million

Organisation level

2 million

MD

MD

Admin

Responsible for

Mercer

Accounting
Office Service

Group Treasury
Group Controller
Group Audit
Information Systems
13

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

L-1

L-2

L-2

L-2

L-1

L-3
L-3

L-2
L-2

L-2
L-2

Mercer

14

The Position and the Person

Position
Class

Mercer

15

Promotion and consequences


Internal
Grading

Reference
Salary

290

IV

220

III

170

II

130

100

X
Utopia
X
Risk
X
Challenge
X
Recognition
X

Promotion steps following the internal grading


Promotion is based on competencies, not on performance

Mercer

16

Market Pay Position

Euro

75

INTERNAL
REFERENCE
50

25

Position class

Mercer

17

Benchmarking

Benchmark
positions

Six levels

Organization
benchmarks

Visionary

100%

Strategic

L-1

70%

20

15

Tactical

L-2

50%

75

40

Operational

L-3

30%

250

75

Delivery

L-4

10%

650

65

25%

1000

200

Total

Mercer

Typical
headcount

18

Position Evaluation process

Executive Interviews
with focus on
direct reports

Focus Groups to evaluate


Positions
at Operational and Delivery levels
Mercer

19

Project Management

Mercer
Know-how
transfer and
guidance

Organisation / Area
representatives
+ HR department

Executive committee
Approve evaluations

Project team
Assure internal equity

Mercer
Quality review

Focus groups
HR department
+ project team member

Mercer

Prepare benchmark evaluations


Define internal terminology

Mercer
Quality review

20

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

21

Position Evaluation should focus on the Position not on the Person

Mercer

22

Mercer Global Offering

IPE3 Tool Kit

Provide IPE License


eIPE Unlimited
IPE3 System Manual
& Consulting
Handbook
Internal IPE3 Guide
Develop and conduct
Internal training
Provide data
collection and
other support tools
Briefing of Mercer
Consultants

Consulting

Project Planning
Size of organisations
Migrate existing IPE2

evaluations to IPE3

Role Clarification
Executive Position

evaluations
Establish new Global
Benchmarks
Consolidate and peer
review evaluations
Redefine relationship
between position class
and grade level

Communication
Understand
behavioural
objectives
Assess the audience
Create communication
strategy and means
Roll out the
communications
strategy

Information
Services

Technology
Analyse Technology
needs and current tools
Outline possible
Technology options
Support decision process
towards new Technology
Provide IT platform
and process specific tools
- Mercer ePRISM
- Mercer MerritNET
- Mercer HR Suite

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

Project Management

Mercer

23

www.mercer.com