Mercer eIPE

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July 2008

Introduction to
Mercer’s
International Position
Evaluation System
Daniele Giugno, Geneva

www.mercer.com
Work Value Measurement measure, and value
differences in work

Less Complexity Greater Complexity

Whole Job Classification Market Pricing Standardized Customized


Ranking (“Roles”) & Slotting Point Factor Point Factor
Description

Jobs ranked using Classes/grades defined Market rates established Points assigned to jobs Points assigned to jobs
general criteria of worth using aspects of job for benchmark jobs; non- based on factors, based on factors, levels
to organisation (e.g., content; jobs assigned to benchmark jobs slotted degrees and points. and factor weights
importance or classes/grades in salary structure Universal factors and Customized factors and
complexity) weights weights to client

Simple Easy to explain Relationship to market Can quickly compare Can compare jobs
Strengths

Easy to maintain Easy to modify values jobs across functions across functions
Adaptable to job families Credible and organisations. Is perceived to be
Common links to market objective and consistent

Potential for bias Unusual jobs may be Interpretation needed to May seem inflexible Effort required to
Limitations

May over emphasize a “forced” slot jobs Administration may develop factors
single factor Potential for bias Difficult if poor data or seem to be a barrier Much effort to administer
fast changing market and implement
Volatile

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The Five Factors

Organisation Organisation size is determined by monetary scale such as sales and


assets, range of activity and number of employees.
1.
Impact Assess nature of impact a position has on the organisation.
Impact
Contribution Assess relative contribution that a position holder makes in the
context of Impact.

Communication
Assess the nature of the necessary communication ability required by
2. a position.
Communication Determine both organisation frame and nature of interests of
Frame
communication contacts.

Assess the requirements to identify, make improvements to, or


Innovation
Positio 3. develop procedures, services or products
n Innovation
Complexity Assess level of complexity that a position holder must deal with.

Measure the nature of knowledge required in the job to accomplish


Knowledge
objectives and create value.
4.
Team Assess the way the knowledge is applied.
Knowledge
Assess the breadth (geographic context) in which the knowledge is to
Breadth
be applied.

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


Risk
5. points are yielded if work conditions meet international standards.
Risk
Environment Assess level of exposure from the working environment.

Mercer 3
Organisation Sizing

The Organisation Context


 include at least one “line” function and two “service” functions.
 is operational enough to produce added value.

Basic Applied Procure Apply Distri-


Engineer Logistics Produce Market Sales Service
R&D R&D Assemble bution

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Impact

Level of Contribution
1 2 3 4 5
NATURE OF
Limited Some Direct Significant Major
IMPACT

Delivery Marked contribution to defining the direction for new


1 products, processes, standards or operational plans
based upon business strategy, with a significant
mid-term impact on business unit overall results --
21 to 30%
2 Operational

3 Tactical

4 Strategic

5 Visionary

Mercer 5
Communication

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

Convince others within the organisation that are


1 Convey skeptical or unwilling to accept new concepts,
practices, and approaches

2 Adapt & Exchange

3 Influence

4 Negotiate

Negotiate
5
Long term

Mercer 6
Innovation

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

1 Follow

2 Check Analyze complex issues and significantly


improve, change or adapt existing methods
and techniques.

3 Modify

4 Improve

Create /
5
Conceptualize

Scientific/Technical
6
Breakthrough

Mercer 7
Knowledge

TEAMS
1 2 3 BREADTH
KNOWLEDGE Team Member Team Leader Teams Manager
Domestic
Limited
1
Job Knowledge
Basic
2 Regional
Job Knowledge

3 Broad Job Knowledge


Global
4 Expertise

Professional
5
Standard
Lead a team through application of
Organisational Generalist
6 broad knowledge of one job area or
/ Functional Specialist basic knowledge of several related job
Broad Practical Experience areas
7
/ Functional Preeminence
Broad and Deep
8
Practical Experience

Mercer 8
Risk

Environment
1 2 3
Low Moderate High
Risk Exposure Exposure Exposure

0 Normal

1 Mental

2 Injury Normal working conditions. Physical


and/or mental work in an environment
where international standards of
safety apply.
3 Disability

Mercer 9
Position Class Conversion Table

Position Position Position


Total point range Total point range Total point range
Class Class 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

Mercer 10
Major IPE applications

Application in Human
IPE deliverables
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
 Recruitment
 A starting point to establish position / competency
profiles  Promotion and succession
planning
 A database to support career planning and succession
 HR information
 An objective reference to solve title issues
 HR controlling
 A reliable base for an equitable salary structure
 HR audits
 A tool that facilitates market benchmarking

Mercer 11
Mapping of Position Evaluation Results

Unit 1 Unit 2 Unit 3 Unit 4


IPE
Class

550 532 PLANT MANAGER 538 PLANT MANAGER 536 DEVELOPMENT MANAGER 546 QUALITY DIRECTOR
Van Gogh Rubens Rembrandt Pinturicchio

60

526
525 522 PLANT MANAGER A 511 LABORATORY MANAGER 516 PERSONNEL MANAGER 516 FINANCE DIRECTOR
Magritte Chagall Miro Gheduzzi
517 ADMINISTRATION 507 PRODUCTION MANAGER 506 SECTION MANAGER
59 MANAGER Matisse Picasso
512 De Vlaeminck 501 TECHNICAL MANAGER
PLANT MANAGER B Cézanne
501 507 Kandinsky
MAINTENANCE MANAGER
Klee
500 497 PROJECT MANAGER 497 SERVICE MANAGER 476 FINANCE MANAGER
Klimt Schiele Borromini
497 SALES MANAGER 491 PERSONNEL MANAGER
58 Raffaello Pozzo
492 PERSONNEL MANAGER 486 SALES MANAGER
Michelangelo Goya
476 481 EDP MANAGER 481 ADMINISTRATION
Leonardo MANAGER
Velasquez
475 472 PROMOTION MANAGER 465 ORGANISATION MANAGER 466 COORDINATOR 471 SERVICE MANAGER
Frangelico Lippi Van Eyck Dali
461 PRODUCTION MANAGER 455 MARKETING MANAGER 451 PROMOTION MANAGER
57 Hobbema Giotto Canaletto

451

Mercer 12
Problems with title comparisons

COMPANY A COMPANY B
TYPE OF COMPANY
Sales company Manufacturing and
Sales company

Turnover 2 million 2 million

Organisation level MD MD

Admin X

Accounting Group Treasury


Responsible for
Office Service Group Controller
Group Audit
Information Systems

Mercer 13
Structure Analysis

Position
Class

L-1

L-2
L-1 L-2
L-1

L-3 L-1
L-2 L-2
L-3
L-2
L-2 L-2
L-2

Mercer 14
The Position and the Person

Position
Class

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Promotion and consequences

Internal Reference
Grading Salary

V 290 X
Utopia
IV 220 X
Risk
III 170 X
Challenge
II 130 X
Recognition
I 100 X

Promotion steps following the internal grading


Promotion is based on competencies, not on performance

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Market Pay Position

Euro 75 INTERNAL
REFERENCE

50

25

Position class

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Benchmarking

Benchmark Typical Organization


Six levels positions headcount benchmarks

Visionary L 100% 5 5

Strategic L-1 70% 20 15

Tactical L-2 50% 75 40

Operational L-3 30% 250 75

Delivery L-4 10% 650 65

Total ± 25% 1’000 ± 200

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Position Evaluation process

Executive Interview’s
with focus on
direct reports

Focus Groups to evaluate


Positions
at Operational and Delivery levels
Mercer 19
Project Management

Mercer
Know-how Executive committee
transfer and • Approve evaluations
guidance

Organisation / Area Project team


representatives Mercer
+ HR department • Assure internal equity Quality review

Focus groups
HR department Mercer
• Prepare benchmark evaluations
+ project team member Quality review
• Define internal terminology

Mercer 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

Information
IPE3 Tool Kit Consulting Communication Technology
Services
 Provide IPE License  Project Planning  Understand  Analyse Technology  Total Remuneration
 eIPE Unlimited  Size of organisations behavioural needs and current tools Surveys
 IPE3 System Manual  Migrate existing IPE2 objectives  Bespoke Surveys
& Consulting evaluations to IPE3  Assess the audience  Outline possible  Benefits and valuation
Handbook  Role Clarification  Create communication Technology options methodology
 Internal IPE3 Guide  Executive Position strategy and means  LTI methodology
 Develop and conduct evaluations  Roll out the  Support decision process
communications towards new Technology
 Market Pricing
Internal training  Establish new Global
strategy  Provide IT platform  PayMonitor
 Provide data Benchmarks
collection and and process specific tools  Global HR Monitor
 Consolidate and peer
other support tools review evaluations - Mercer ePRISM  Mercer Membership
 Briefing of Mercer  Redefine relationship - Mercer MerritNET
Consultants between position class - Mercer HR Suite
and grade level

Project Management

Mercer 23
www.mercer.com

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