www.mercer.com

Introduction to Mercer’sInternational Position Evaluation System

July 2008

Daniele Giugno, Geneva

2Mercer

Work Value Measurement measure, and value differences in work

Less Complexity Greater Complexity

Whole JobRanking

Classification(“Roles”)

Market Pricing& Slotting

StandardizedPoint Factor

CustomizedPoint Factor

De

sc

rip

tio

nS

tre

ng

ths

Lim

ita

tio

ns

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

SimpleEasy to maintain

Potential for biasMay over emphasize a single factor

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 weightsCustomized factors and weights to client

Easy to explainEasy to modifyAdaptable to job families

Relationship to market valuesCredible

Can quickly compare jobs across functions and organisations.Common links to market

Can compare jobs across functionsIs perceived to be objective and consistent

Unusual jobs may be “forced”Potential for bias

Interpretation needed to slot jobsDifficult if poor data or fast changing marketVolatile

May seem inflexibleAdministration may seem to be a barrier

Effort required to develop factors Much effort to administer and implement

3Mercer

The Five Factors

Organisation size is determined by monetary scale such as sales and assets, range of activity and number of employees.

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 nature of impact a position has on the organisation.

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.

Assess the nature of the necessary communication ability required by a position.

Assess the nature of the necessary communication ability required by a position.

Determine both organisation frame and nature of interests of communication contacts.

Determine both organisation frame and nature of interests of communication contacts.

Assess the exposure to risk of mental or physical injury in the job. No points are yielded if work conditions meet international standards.

Assess the exposure to risk of mental or physical injury in the job. No points are yielded if work conditions meet international standards.

Assess level of exposure from the working environment.Assess level of exposure from the working environment.

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

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

Assess the way the knowledge is applied.Assess the way the knowledge is applied.

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

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

Organisation

Impact

Contribution

Communication

Frame

Innovation

Complexity

Knowledge

Team

Breadth

Position

1. Impact

2. Communication

3. Innovation

4.Knowledge

Risk

Environment

5. Risk

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

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

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

4Mercer

Organisation Sizing

BasicR&D

EngineerProcureLogistics

Applied R&D

Produce

ApplyAssemble

MarketSales

Distri- bution

Service

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

5Mercer

Impact

321 4 5NATURE OF

IMPACT

Delivery

Operational

Tactical

Strategic

Visionary

1

2

3

4

5

SomeLimited SignificantDirect Major

Level of Contribution

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%

6Mercer

Communication

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

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

External SharedInternal Shared

FRAME

External DivergentInternal DivergentCOMMUNICATION

Convey

Adapt & Exchange

Influence

Negotiate

NegotiateLong term

321 4

1

2

3

4

5

7Mercer

Innovation

DifficultDefined

COMPLEXITY

Multi-Dimensional

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

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

1

2

3

4

5

6

321 4

INNOVATION

Follow

Improve

Create / Conceptualize

Scientific/Technical Breakthrough

Modify

Check

Complex

8Mercer

Knowledge

KNOWLEDGE

Limited Job Knowledge

Basic Job Knowledge

Broad Job Knowledge

Expertise

ProfessionalStandard

Organisational Generalist / Functional Specialist

Broad Practical Experience / Functional Preeminence

Broad and Deep Practical Experience

Lead a team through application of broad knowledge of one job area or basic knowledge of several related job areas

Lead a team through application of broad knowledge of one job area or basic knowledge of several related job areas

Teams ManagerTeam LeaderTeam Member

TEAMSBREADTH

Domestic

Regional

Global

1

2

3

4

5

6

7

8

321

9Mercer

Risk

Disability

Injury

Mental1

2

3

321

Risk

Environment

0

HighExposure

Low Exposure

ModerateExposure

Normal

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

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

10Mercer

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

11Mercer

Major IPE applications

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

A reliable base for an equitable salary structure

A tool that facilitates market benchmarking

IPE deliverablesApplication in Human

Resources Management

Organisational analysis

Remuneration management

Recruitment

Promotion and succession planning

HR information

HR controlling

HR audits

12Mercer

Mapping of Position Evaluation Results

IPEClass

Unit 1 Unit 2 Unit 3 Unit 4

550

60

526

532 PLANT MANAGERVan Gogh

538 PLANT MANAGERRubens

536 DEVELOPMENT MANAGERRembrandt

546 QUALITY DIRECTORPinturicchio

525

59

501

522

517

512

507

PLANT MANAGER AMagritteADMINISTRATION MANAGERDe Vlaeminck PLANT MANAGER BKandinskyMAINTENANCE MANAGERKlee

511

507

501

LABORATORY MANAGERChagallPRODUCTION MANAGERMatisseTECHNICAL MANAGERCézanne

516

506

PERSONNEL MANAGERMiroSECTION MANAGERPicasso

516 FINANCE DIRECTORGheduzzi

500

58

476

497

497

492

481

PROJECT MANAGERKlimt SALES MANAGERRaffaelloPERSONNEL MANAGERMichelangeloEDP MANAGERLeonardo

497

491

486

481

SERVICE MANAGERSchielePERSONNEL MANAGERPozzoSALES MANAGERGoyaADMINISTRATION MANAGERVelasquez

476 FINANCE MANAGERBorromini

475

57

451

472

461

PROMOTION MANAGERFrangelicoPRODUCTION MANAGERHobbema

465

455

ORGANISATION MANAGERLippiMARKETING MANAGERGiotto

466

451

COORDINATORVan EyckPROMOTION MANAGERCanaletto

471 SERVICE MANAGERDali

13Mercer

TYPE OF COMPANY

Turnover

Organisation level

Responsible for

2 million

Sales company

COMPANY A

MD

Admin

X

AccountingOffice Service

2 million

Group TreasuryGroup ControllerGroup AuditInformation Systems

COMPANY B

Manufacturing andSales company

MD

X

Problems with title comparisons

14Mercer

Structure Analysis

PositionClass

L

L-1

L-1

L-1L-1

L-2

L-2L-2

L-2

L-2

L-2

L-2

L-2

L-3

L-3

15Mercer

The Position and the Person

PositionClass

16Mercer

InternalGrading

ReferenceSalary

V 290

IV 220

III 170

II 130

I 100

Promotion steps following the internal grading

Promotion is based on competencies, not on performance

X

X

X

X

XUtopia

Risk

Challenge

Recognition

Promotion and consequences

17Mercer

Market Pay Position

Position class

Euro INTERNALREFERENCE

25

50

75

18Mercer

Benchmarking

Benchmarkpositions

Organizationbenchmarks

Six levels

Visionary

Strategic

Tactical

Operational

Delivery

Total

L

L-1

L-2

L-3

L-4

Typical headcount

100%

70%

50%

30%

10%

± 25%

5

20

75

250

650

1’000

5

15

40

75

65

± 200

19Mercer

Position Evaluation process

Executive Interview’swith focus ondirect reports

Focus Groups to evaluate Positionsat Operational and Delivery levels

20Mercer

Project Management

Organisation / Arearepresentatives

+ HR department

HR department+ project team member

Executive committee

• Approve evaluations

Project team

• Assure internal equity

Focus groups

• Prepare benchmark evaluations• Define internal terminology

MercerQuality review

MercerQuality review

MercerKnow-how

transfer and guidance

21Mercer

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

22Mercer

Position Evaluation should focus on the Position - not on the Person

23Mercer

Mercer Global Offering

IPE3 Tool Kit Consulting TechnologyCommunication

Project Management

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

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

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

Understand behavioural objectives

Assess the audience Create communication

strategy and means Roll out the

communications strategy

InformationServices

Total Remuneration Surveys

Bespoke Surveys

Benefits and valuation methodology

LTI methodology Market Pricing PayMonitor Global HR Monitor Mercer Membership

www.mercer.com