14 3 2 - - 008, Vilnius
International Position Evaluation System (IPE)- the battle tested
methodology to achieve successful human resources practicies
Johan Ericsson, Stockholm
http://se.mercer.com
Agenda
Why work with position evaluation
and with International Position Evaluation (IPE)?
Benefits and outcomes from IPE Some examples E-IPE Mercers web-based position
evaluation tool
Q&A
Mercer
Why Position Evaluation ?
Systematic and easy process for identification of differences between positions all over the organization (objectivity). The IPE system is an analytical points system which includes 10 factors (common terminology). Resulting in a Position Class expressing the relative value of a position for the Organization (appreciation). The IPE system is used for internal and external comparisons (equity). The Methodology is advanced, but easy to apply and understand (easily communicated).
Mercer
IPE is a Work Value Measurement methodology
Work Measurement is a process by which an organization describes,
measures, and values differences in work.
It enables them to: Maintain competitive compensation Pay people fairly, relative to other employees Pay people in line with the value they bring to the organization Assess the effectiveness of organizational structures Assess the appropriateness of the job/person fit Align individual goals with the organizations objectives Create effective employee development and succession planning
processes
Mercer
P Concept
POSITION
PERSON
Individual
PERFORMANCE
Incentives (Short & Long Term)
Base Salary (local reference)
Based on Position Evaluation
Based on Competencies, Market etc.
Based on Performance Evaluation
Mercer
Integrated Human Resources Management toolbox
Business Strategy Business Strategy
Organization
Position Evaluation
Position Clarification Position Clarification Objective Setting Objective Setting Position Evaluation Position Evaluation Performance Review Performance Review
Performance Evaluation
Business Business
Compensation Compensation
Person Development Person Development
Person Evaluation
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The Five Factors
Organization
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 relative contribution that a position holder makes in the context of Impact Assess the nature of required communication ability Determine both organization frame and nature of interests of communication contacts Assess requirements to identify, make improvements to, or develop procedures, services or products Assess level of complexity a position holder deals with Measure the nature of knowledge required to accomplish objectives and create value Assess how the knowledge is applied in teams Assess the geographic context in which knowledge is applied Assess exposure to risk of mental or physical injury in the job; no points given if work conditions meet international standards Assess level of exposure from the working environment
1. Impact
Impact Contribution
2. Communication
Communication Frame
Position
3. Innovation
Innovation Complexity
Knowledge
4. Knowledge
Team Breadth Risk Environment
5. Risk
Mercer
Mercers approach can be differentiated from others
705 Mercer's model differs from others Mercer's model differs from others because itit places a greater emphasis because places a greater emphasis on the impact that aa job has on the on the impact that job has on the organization's results as opposed to organization's results as opposed to the job inputs the job inputs
260
130 115 35
5 Contribution Frame
10
10 Complexity
10 Teams
Environment Knowledge
Impact Organization
Mercer
Communication
Innovation Breadth
Risk
Sophisticated sizing methodology grounded in economic analysis
Nature of Organization
& ic R as
le tics mb gis n o se As t d R ineer ure L uce utio ice ie ly rke es istrib erv ppl ng Proc rod App Ma Sal A E P S D &D
Economic Volume
Total Number of Staff
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Position Evaluation should focus on the Position- not on the Person
Mercer
What are we evaluating? Position requirements based on a current and accurate understanding of roles and responsibilities
It is not an individual judgment of performance or how well the tasks are done
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Some examples of global clients working with Mercer & IPE
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The benefits of Mercers IPE System
The major IPE applications
IPE results
Application in Human Resources Management
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
Remuneration management Organisational analysis Recruitment Promotion and succession planning HR information HR controlling HR audits
A reliable base for an equitable salary structure
A tool that facilitates market benchmarking (cost control)
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48 Position Classes From points to an IPE -
C lass
Points 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
IPE Class 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55
Points 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
IPE Class 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71
Points 826 851 876 901 926 951 976 1001 1026 1051 1076 1101 1126 1151 1176 1201 850 875 900 925
IPE Class 72 73 74 75
The950 - 76 is the IPE C lass common currency 975 77 which binds together -compensation surveys 1000 78 1025 in more than79 countries. 70
1050 1075 1100 1125 1150 1175 1200 1225 80 81 82 83 84 85 86 87
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What is the actual compensation situation?
-Company XYZ
Type of Compensation?
SEK
4 000 000 3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000
Comp 5 - Total Remuneration
Upper Quartile INTERNAL REFERENCE
What is our benchmark / peer group? Context is everything!!
Median
Lower Quartile
What is our Compensation policy?
IPE-Class
60 61 62 63 64 65 66 67 68 69 70 71 72 73
What is the IPE-Result?
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Mercer Total Remuneration Surveys (TRS)
Mercers TRS surveys includes up to 400 benchmark positions, from senior management to clerical, in the following functions: Administration Logistics and Purchasing Engineering Manufacturing Finance Marketing General Management Research and Development Human Resources Sales Information Technology Industry s - pecific jobs, such as manufacturing, pharmaceutical, auto, consumer goods and more are available in many countries.
The TRS includes the following components:
Code
COMP1
Description
Annual Base Salary (monthly base salary times no. of months guaranteed) Annual Guaranteed Cash Compensation (COMP1 plus other guaranteed or legally required cash payments) Annual Total Cash Compensation (COMP2 plus short-term incentives) Annual Total Compensation (COMP3 plus value of long-term incentive programs) Annual Total Remuneration (COMP4 plus value of the most important benefits and perquisites)
Base Salary Non-Variable Comp. Annual Total Cash Comp. Annual Total Cash + Long Term Incentives (LTI)
COMP5
COMP4 COMP3 COMP2 COMP1
COMP2
COMP3 COMP4
COMP5
Annual Total Comp. (Cash + Benefits + LTI)
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Clear Ranking of Positions
Prior to a job evaluation exercise
L
Post a job evaluation exercise
L
L-1 L-2 L-1 L-1 L-2 L-2 L-2 L-2 L-2 L-2 L-2 L-2 L-2
L-1
L-1
L-1
L-1
L-2 L-3 L-3
L-3 L-3
L-1
L-2 L-2
L-2
L-3 L-3
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Matching Person / Position
Position Class
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Define Employee Groups
Groups
Directors
Job Size L
L-1 L-2
Managers
L-1 L-1 L-2
L-2
Individual Contributors
L-3 L-3
L-1
L-2 L-2
L-2
L-2 L-2
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Mercer
Define Grades Within Groups
Grade
15
IPE Job Size L
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L-1 L-2
13
L-1 L-1 L-2
12
L-2
11
L-3 L-3
L-1
L-2
10
L-2 L-2
L-2 L-2
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IPS Data Management IPE- Ranking Positions by Level
Organization Chart
L L-1 L-1 L-2 L-2 L-2 L-1 L-2 L-2 L-3 L-1 L-2 L-3 L-2 L-3 L-3 L-2 L-2 L-2 L-2 L-2 4 L-2 L-2 L-2 L-1 L-2 L-1 L-1 L-2 L-1 L-2 3 L-2 L-3 L-3 L-2 L-2 L-1 L-1 L-2 L-1 L-2 2 L-2 L-1
Position Class
Organization chart by IPE Level
L Level 1
Linkage to Levels
Position Class L
Positions Evaluation
Job Documentation IPE Evaluation Process
2
Grade
22 21 21 21 20 20 19 19 62 61 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45 44 43
Position Matrix
IPE PC Marketing & Sales Human Resources
M&S Vice President Factory Director National Sales Mgr Marketing Manager Brand Manager C&B Mgr Training & Devt Mgr Recruitment Mgr District Sales Sup. Product Manager Superintendent Environment Specialist Production Sup. Maintenance Sup. Sr Engineer HR Executive Engineer Jr Engineer Sr Technician Technician Production Leader Technician Operator HR Director Production Director Engineering Director Quality Director Maintenance Mgr Test Engineering Mgr Quality Systems Mgr Line Production Mgr
3 Organizational Levels
Manufacturing
Level 1 Level 2 Level 3
Contribution Impact Organization
Frame Communication
18 18 17 17 16 16
Complexity Innovation
Teams Knowledge Breadth
Product Specialist Sales Executive
Level 4
15 14 13 12 11 10
Secretary Sales Administrator
HR Officer HR Clerk Receptionist Driver Messenger
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What can the Position Evaluation be used for? - Structure Pay, Titles, Career Planning e.g.
GRADE IPE POINTS IPE Min Mid Max Classes PROMOTION
Interval of Positions
Hierarchy
TITLES Expertise
REFERENCE SALARY By Class By Grade By range
676 - - 825 750
66 - 71
Executive Committee
Career Planning
2 551 - 08 675 6 61 - 65 Utopia Directors
Organizational Levels, 4 Job 376 - 13- 450 4 Families.
5 6 7 8 9 301 - 38 375 3 251 - 75 300 2 201 - 25 250 2 151 - 75 200 1 126 - 38 150 1 -
451 - 00 550 5 -
57 - 60
Risk
Deputy Directors Senior Managers Managers Supervisors Supervisors Employees Employees
54 - 56 51 - 53 49 - 50 47 - 48 45 - 46 44
Challenge Recognition
240000 230000 220000 210000 200000 190000 180000 175000 Experts 170000 165000 160000 155000 Specialists 150000 145000 140000 135000 Technicians 130000 125000 120000 115000 Analysts 110000 Assistants 108000 103000 99000 95000 92000 89000 87000 85000
Compensation
215000 260000 - 180000
175000
200000 - 150000
150000
170000 - 130000
130000 115000 105000 97000 90000 86000
145000 - 115000 125000 - 105000 110000 - 100000 105000 - 90000 95000 - 85000 90000 - 82000
Titles
Interval of points
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IPE Position Class linkage to market data in 70+ countries
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Examples of reports that company can produce
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Position Evaluation Systems Remarks
All evaluation tools are methods to reduce the subjectivity
when it comes to evaluating positions
This is not a science The most important asset you have in the evaluation process is
common sense
Evaluations are tentative until the final list is prepared Evaluate the position at a competent level of performance Final evaluations represent the teams decision; you should support
the teams decision and not keep a dissenting opinion
Evaluations take into account the current situation as it exists todayif
organizational changes are anticipated, evaluations will be redone
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Mercers e IPE Sstem - y
eIPE Unlimited
web software at: http://ipe31.mercer3-p.com
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Main Benefits of using e IPE include: Quality assurance Globally consistent results! Corporate Governance New level of control of the evaluation process in the corporation Ensures harmonisation of results Saves time and reduces paperwork Online calculations any time, anywhere access Simplicity of process and quick comparisons Create relevant reports of IPE s - tructure
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The eIPE evaluation process
IPE in four steps: Define your benchmark positions and build a global database with standard evaluations. Review your company structure, decide which operational units should be considered as organizations and determine their sizing. Add positions to the organizations by applying benchmarks and adjust the standard evaluation as required. Report and cross check your evaluations by job families and across organizations. Export position evaluation details in Excel.
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Step 1: Copy Mercer Standard Benchmarks
- or create own Group Benchmarks
Develop Group specific benchmarks and standard evaluations within own context.
Selection of >1500 benchmarks by job family and with IPE standard evaluation score.
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Step 2: Add and Size a Company
Select, value chain type and mark the applicable steps to calculate multiplier enter sales volume and head count. and Organisation Size degree is calculated
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Step 3: Add positions in the Company
- share and secure governance of global evaluation results
Flexible Search for positions Sort by a Click on the column label
Flag your modifications
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Step 4: Check the Evaluation Results in My Reports
Position holder The IPE factors with related points and Position Class
Printer Friendly version from the Browser or export to Excel
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Print the Mapping of Positions
by Job Family and by Company
By business unit or by Job Family
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http://se.mercer.com
