1. Mercer’s IPE: From Surveys to Global Leveling
Dave Borrebach Lynne Delewski Bill Strobl

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
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3. 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….
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4. 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).
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5. 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
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6. IPE Overview: The Four Primary Factors
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
Assess nature of impact a position has on the organization
Assess relative contribution that a position holder makes in the context of Impact
2. Communication
Communication
Frame
Assess the nature of required communication ability
Determine both organization frame and nature of interests of communication contacts
Position
3. Innovation
Innovation
Complexity
Assess requirements to identify, make improvements to, or develop procedures, services or products
Assess level of complexity a position holder deals with
4. Knowledge
Knowledge
Team
Breadth
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
An additional Risk factor is available when hazard conditions in the role potentially can harm the incumbent
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7. Impact: Review the Structure and Size the Organization
President and Chief Executive Officer
Corporation
Chief Human Resources Officer
Chief Financial Officer
Nature of Organization
Corporate Secretary
Chief Information Officer
Region
Regional Director Asia / Pacific
Regional Director Europe
Regional Director Latin America
Regional Director North America
Business Units
Managing Director
Germany
Managing Director
France
Managing Director Italy
Managing Director Great Britain
Managing Director Scandinavia
Director Manufacturing
Director Finance
Director Sales & Marketing
Director Human Resources
Director Logistics
Review of the Value Chain
Economic Volume
Adjusted Economic Size
Total Number of Staff
Capital Intensive
versus
People Intensive
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8. Factor 1: Impact
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
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9. Level of Contribution Modifies Impact
Limited
Some
Direct
Significant
Major
Level of Contribution
Hard to discern contribution to achievement of concrete results
Easily discernible contribution that usually leads indirectly to achievement of 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 =
Given that not all jobs at a given impact level make the same contribution , we use another dimension to take that into account.
Level of contribution has five categories which range from limited and indirect at one end, and direct and major at the other, with the “Direct” category serving as the dividing line. You can think of contribution in terms of these descriptors, or you can think in terms of percentages. In either case, to make the determination around contribution, it’s critically important to understand the business, how decisions are made and how supervisors view the jobs.
[Presenter: Walk through descriptors, starting with Limited and Major, then discussing the other descriptors.]
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10. Factor 2: Communication= +
COMMUNICATION
Nature
Desired Outcome
Convey
Communicate by statement, suggestion, gesture, or appearance
Understanding of information
Adapt & Exchange
Reach agreement through flexibility and compromise
Comprehension of facts/
practices/policies
Influence
Effect change without direct exercise of command
Acceptance of concept/practice/
approach
Negotiate
Come to agreement by managing communications through discussions and compromise
Acceptance of complete
proposal by compromise/discussion
Negotiate
Strategically
Manage communications of great importance within an integrated framework and/or with long-term implications
Acceptance of
strategic agreement
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11. Modify by Most Difficult Communication Context
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
Internal Shared
External Shared
Internal Divergent
External Divergent
FRAME
Internal Shared
External Shared
Internal Divergent
External Divergent
FRAME
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12. Factor 3: Innovation Breakthrough Create/Conceptualize Improve Modify
New & Unprecedented
- to take a quantum leap
Breakthrough
From
abstract idea
To a new direction
Create/Conceptualize
Original
Improved
Improve
Original
Modified
Modify
Defined
Realign with Defined
Check
Innovation has six different levels, ranging from Follow, where a position holder is expected to follow clear instructions, procedures or processes, up to Breakthrough, which is the development of new and unprecedented scientific or technical ideas. Each level is distinctly described and can be clearly differentiated.
The continuum begins with Follow – where the position holder follows clear instructions, procedures or processes. Only very limited changes are expected from the position holder.
Check entails correcting and resolving issues and problems in existing systems and processes with help from existing norms, procedures, processes or authority.
Modify pertains to jobs responsible for actually changing course. While the direction may be established, these positions adjust part of a process or systems to be more effective.
Improve involves significantly changing or improving existing broad systems or processes – for example, changing the way a product is produced.
Create/Conceptualize is the highest level of innovation in most organizations. Generally, only R&D would be at the truly cutting edge Breakthrough level. Positions at the Create/Conceptualize level create truly new methods, techniques or products. The ideas may already exist, but the position holder brings them together in new ways.
Defined
Follow
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13. Modify Innovation by Complexity
Defined
Difficult
Complex
Multi Dimensional
COMPLEXITY
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
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14. Factor 3: Knowledge? Specialist Generalist 8
In-depth management knowledge in most functions across several businesses of the corporation 7
Industry expert in the profession
In-depth management knowledge across several line and support functions or businesses
Organization expert in the profession
Broad management knowledge across several functional areas or businesses 6
Mastery of specific professional discipline at expert level
Broad knowledge of several, different areas across functions 5
Advanced knowledge of specific discipline within one’s own job area 4 3
Broader theoretical or advanced technical/operational know-how 2
Specialized commercial, technical or operational know-how 1
Fundamental know-how within narrow boundaries
Specialist
Generalist
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15. Modify Knowledge by Context of Teams
Team Member
Team Leader
Teams Manager
Context of Teams
and
and
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16. Geographic context in which knowledge is applied
Breadth Considers the Geographical Context in Which Knowledge is Applied
Geographic context in which knowledge is applied 1 2
Domestic = 1
Region = 2
Global = 3 3
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17. The Position Evaluation Summary Engineering Manager
Degree
Points
Impact Size Impact Contribution Level 4
Communication Communication Frame 3
Innovation Innovation Complexity 3
Knowledge Knowledge Teams Breadth 2
Risk (Optional) Risk Environment 0
TOTAL POINTS POSITION CLASS
Marked contribution to defining the business strategies of a corporate
business 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
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18. Position Class Conversion Table26 - 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
126
150 44
526
550 60
926
950
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
676
700 66
1076
1100 82
301
325
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
Position Class is the “common currency” that links into Compensation Surveys in more than 60 countries
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19. Mercer IPE to Hay: Correlation Table Note: These are guidelines not exact correlations
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20. Example Output by IPE Level…also a starting point for developing global grades/bands
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21. 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
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22. The Survey Results Let’s look at the survey results:
Job-based market results
IPE-based market results
Combination Job/IPE market results
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23. Survey Results: Brand/Product Manager Actual Market Data by Job
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24. Survey Results: Actual Market Data by IPE Position Class
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25. Survey Results: Brand/Product Manager Actual Market Data by IPE Position Class 53 Only
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26. Survey Results: Regressed Statistics by Function
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27. Survey Results: IPE Position Class by Job Overview
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28. Summary Statistics: Actual Market and Regressed Market
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29. 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
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30. First Step Towards Global Leveling: Review Your Organization’s Position Classes across countries: By Position Class
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31. 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
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32. 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
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33. Questions?
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