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www.imercer.com/trs
Mercer Remuneration Surveys in the Baltic Countries –Reliable and on-time support to weigh your internal remuneration decisions
March 14, 2008
Žilvinas Akelis, Vilnius
1Mercer
Systematic salary management approach
Aims of salary system of a company – to reach the balance between:– Internal equity– External competitiveness
Mercer’s support for systematic salary management: – Clear and recognised job ranking methods – Reports on market pay levels – remuneration surveys
2Mercer
Market prevalence reports
Company reward system development
Policy development
Strategy implications, aims of remuneration system
IPhase
Governance and implementation
Budgeting principles,Decision making accountabilities,
Salary review routines
IVPhase
Job Leveling
Job analysis, evaluation Clear position ranking design
IIPhase
Pay Structures Base salary structureIncentives schemes,Benefits distribution
IIIPhase
Reward principles
and processesRew
ard structuresM
ercer salary m
anagement
tools Job measurement tools –International Position
Evaluation (IPE)
Detailed salary reports of target market
Salary review inputs on annual basis
3Mercer
Reward management – top-down approach
Who is in charge of company target achievement?
Are long-term targets set to those in charge?
How the ones are paid for achievement of those targets?
Reward structure for Executives
Long-term arrangements
Remuneration system for the staff
Internal equity requirements
Competitiveness of executive
package
Competitiveness of executive
package
Measurement of overall
competitiveness
Measurement of overall
competitiveness
4Mercer
Management of all total remuneration elements
Basic salary set in job contract
Allowances: for night/shift work, travels, meals, etc.
Short-term Incentives (bonus and reward for performance results)
Benefits and perquisites in monetary value
Long-term Incentives (long-term result related managerial rewards)
Comp 1Comp 1Comp 2Comp 2
Comp 3Comp 3Comp 4Comp 4
Comp 5Comp 5
Total remuneration management requires capturing all elements of tangible rewards and within major remuneration components.
Total remuneration management requires capturing all elements of tangible rewards and within major remuneration components.
Basic Salary
Total Cash
Total Remuneration
5Mercer
Differences of remuneration mix practice
Increasing importance of Long-term Incentives for top level jobs.
Still very extensively used: Short-term Incentives –annual bonus practice.
0%
20%
40%
60%
80%
100%
Specialists MiddleManagement
Top Management0%
20%
40%
60%
80%
100%
Specialists MiddleManagement
Top Management
Benefits
Long-term Incentives
Short-term Incentives
Base Salary
PolandLithuania
Mercer Total Remuneration Survey, 2007
6Mercer
Pay Structures defined
Pay structure defines minimum and maximum bands for each remuneration element in career levels.
Several pay structures are designed within the organization, each has different bands defined.
0 Lt
1.000 Lt
2.000 Lt
3.000 Lt
4.000 Lt
5.000 Lt
6.000 Lt
7.000 Lt
8.000 Lt
9.000 Lt
10.000 Lt
25 75 125 175 225 275 325 375 425 475Internal job hierarchy, IPE points
Pay
per m
onth
, LTL
Total Cash, actual
7Mercer
Salary bands aligned to the market
Pay structure is compared with the market in two ways:– Policy line alignment– Key position alignment
0 Lt
1.000 Lt
2.000 Lt
3.000 Lt
4.000 Lt
5.000 Lt
6.000 Lt
190 240 290
Internal job hierarchy, IPE points
Pay
per
mon
th, L
TL
0 Lt
1.000 Lt
2.000 Lt
3.000 Lt
4.000 Lt
5.000 Lt
6.000 Lt
7.000 Lt
8.000 Lt
9.000 Lt
10.000 Lt
0 50 100 150 200 250 300 350 400 450 500Internal job hierarchy, IPE points
Pay
per
mon
th, L
TL
Company Company policy linepolicy line
Market Market medianmedian
Benchmark Benchmark position position market market medianmedian
Benchmark Benchmark position position
upper upper quartilequartile
Mercer surveys –relevant support for salary system development
9Mercer
Participating in the Mercer remuneration surveys company is supported with relevant information solutions
Market remuneration trends and prevalence reports
Internal job map based on matching with Mercer benchmark positions and organisation sizing
Comparison of company remuneration data to market
Comparisons of benchmark position to market
Annual salary movement analysis
Policy development
IPhase
Job Leveling
IIPhase
Pay Structures
IIIPhase
Governance and implementation
IVPhase
10Mercer
Position leveling in Mercer’s e-IPE web-based system
Participation in Mercer surveys enables company to start building internal job structure using defined Mercer benchmark positions in accordance with company specifics.
Participation in Mercer surveys enables company to start building internal job structure using defined Mercer benchmark positions in accordance with company specifics.
11Mercer
Graphical comparison of company remuneration data to market
The value of Mercer Remuneration Surveys is that company compares its own data to the selected market and can easily evaluate competitiveness of every compensation element and every employee.
The value of Mercer Remuneration Surveys is that company compares its own data to the selected market and can easily evaluate competitiveness of every compensation element and every employee.
Company practice
line
Company deviation graph
Company practice line graph
Company Incumbent
data
12Mercer
Comprehensive report on every benchmark position
Every benchmark position is reported with full details on every compensation element.
Every benchmark position is reported with full details on every compensation element.
Mercer offer in the Baltic countries
14Mercer
Why Mercer Executive Remuneration Guide (MERG)?
The target group – leading and most recognized companies in the country
Covering senior management positions (CEO and function directors)
Precise job evaluation considering company specifics and size of organization – avoiding overgrading
Thorough data collection and analysis (not part of overall survey) –comprehensive reports on long term incentives and benefits
15Mercer
MERG in the Baltic countries 2008
Third year in the Baltic markets
Largest companies in the markets –around 20 participants in each
Comprehensive reports for each country and for the whole Baltic region
Survey report delivered – end of September, 2008
16Mercer
Total Remuneration Survey in the Baltic countries 2008
Around 200 benchmark positions in various industry sectors
Up to 100 participating companies in each market
Possibility to build target group of peer companies in interactive PayMonitor™ tool
Survey report delivered in September, 2008
Special industry sector surveys: – IT companies in Latvia (delivered in May)– Retail companies in Lithuania, Latvia and Estonia (delivered in June)
17Mercer
Accurate benchmarking results (“two in one”): Every incumbent is assigned to a specified benchmark position (not job
family only) Position class of benchmark position is not predefined – final job size
depends on its actual impact
Well established organization sizing – for precise definition of job’s position class
Narrow range of IPE points in each position class – same benchmark position can be assigned to several position class values
Industry specific benchmark positions – covering specifics market demands
Precise benchmark position market remuneration information – for easy cross-check possibility
High quality reporting tool PayMonitor™ – “database in hands of customer”
Web-based position ranking tool e-IPE – available for survey participants
What’s special about Mercer Surveys?