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H E A L T H W E A L T H C A R E E R
M E R C E R W E B C A S T
M A X I M I S I N G T H E VA L U E
O F J O B E VA L U AT I O N
SEPTEMBER 8TH, 2015
David Wreford, Mercer, London
Principal
Mark Bonsels, Mercer, Frankfurt
Principal
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T O D A Y ’ S S P E A K E R S
David Wreford
Principal, London
Mark Bonsels
Principal, Frankfurt
European Workforce Rewards
Practice Leader
Senior Workforce Rewards
Consultant and Grading Expert
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A G E N D A
W H A T W E ’ L L C O V E R T O D A Y
• Market context: Is job evaluation being re-defined?
• Survey findings: What are they telling us?
• The benefits of job evaluation: How can they be leveraged further?
• Tips for maximising its value: What can you do?
• Q&A
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MARKET CONTEXT
IS JOB EVALUATION BEING
RE-DEF INED ?
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J O B E V A L U A T I O N R E - D E F I N E D ?
T H E D R I V E F O R C L A R I T Y , C O N S I S T E N C Y,
C O N T R O L , … A N D M O R E ?
• Global moves to strengthen HR governance
• Increasing role for HR/Reward to influence business outcomes
• Simplification of reward programmes and the harmonisation of global plans
…….applied consistently
• Well managed and transparent reward structures, and line managers who are
consistent advocates of rewards result in better employee perception of internal equity
• Emergence of analytics to inform the investment in HR programmes and measure ROI
• The need for greater integration of HR programmes, on a common foundation
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SURVEY F INDINGS:
WHAT ARE THEY TELL ING US?
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W H Y A J O B E V A L U A T I O N S U R V E Y ?
O B J E C T I V E & S C O P E
What are the benefits and return on
investment (ROI) from job evaluation ?
• Can job evaluation help to position HR
as a strategic advisor, supporting
business decisions that need to be
based, not just on Finance and
Operations, but also on people?
• Does job evaluation really promote
fairness, ensure consistency and help
to control labour costs in a globalised
environment?
• What are the key benefits of
implementing job evaluation, for the
business as well as the HR function?
Survey sections:
• Relevant employee group(s)
• Main benefits for an organisation
• Areas which derive most value add from job
evaluation
• How job evaluation supports the overall
business strategy
• Return on investment (ROI), grading
efficiency and cost savings
• Quality and consistency of job evaluation
results
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Other includes: Other Non-Manufacturing (3%), Retail &
Wholesale (3%), Other Non-Durable Goods Manufacturing
(3%), Mining & Metals (2%).
D R A W I N G F R O M 1 3 0 R E S P O N S E S I N E U R O P E
B R O A D I N D U S T R Y P A R T I C I P A T I O N
Companies of all sizes participated in the
survey ….
… of which more than half of the
organisations report revenue above EUR1
billion.
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E M P L O Y E E S E G M E N T S
J O B E V A L U A T I O N S U I T A B L E F O R A L L
• Job evaluation is mostly
considered suitable for all
employee segments.
• No company reported that it
uses job evaluation solely for
employees usually covered by
a collective bargaining
agreement.
Based on 130 responses.
*Covered by collective bargaining agreement
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M A I N B E N E F I T S F O R O R G A N I S A T I O N S
S U P P O R T B R O A D R A N G E O F B U S I N E S S T H E M E S
A N D H R P R O G R A M M E S
• Nine out of ten respondents
believe that job evaluation is
fundamental for enabling
positions to be compared both
internally and externally.
• Three-quarters (72%) of
respondents rank organisational
alignment in the top five
objectives of job evaluation,
followed by transparency (65%),
standardised and lean grading
process (65%), and global
application (54%).
• Participants rank the goal of
controlling cost as important but
with a lower degree.
Based on responses from 130 entities.
Note: Organisations were asked to indicate top five answers; therefore, the total exceeds 100%.
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M O S T V A L U E A D D E D A R E A S I N H R
B R O A D U S E A N D V A L U E A D D I N D I C A T E T H E
E M E R G E O F M O R E I N T E G R A T E D P R O G R A M M E S
• Traditionally, job evaluation
adds value in the salary
benchmarking process and
compensation management,
forming the foundation for
comparisons across
geographies and industries.
• But its relevance and use for
other key HR processes and
services such as recruitment,
development and succession
planning are recognised.
Based on responses from 130 entities.
Note: Organisations were asked to indicate top three answers; therefore, the total exceeds 100%.
Other includes: internal equity; global consistency; international transfers; critical perspective on internal organisations;
recruitment and development; objective comparison across functions and operating companies; annual performance interview,
and, consequently, development and talent management.
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J O B E V A L U A T I O N A N D B U S I N E S S S T R A T E G Y
M E A S U R E M E N T S Y S T E M E N A B L E S B E T T E R
A N A L Y S I S , I N S I G H T S A N D D E C I S I O N S
• Job evaluation is a key HR
management tool, helps in
many ways to support the
overall business strategy and
decision making:
– According to 81% of
participants, job evaluation
supports business strategy
by supporting uniformity
and consistency
– Strategic workforce
planning ranks second
(65%), followed closely by
aligned resource planning
(62%)
Based on responses from 128 entities.
Note: Organisations were asked to indicate top three answers; therefore, the total exceeds 100%.
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C O N S I S T E N C Y W I T H I N T H E O R G A N I S A T I O N
C O M M O N L A N G U A G E A C R O S S C O U N T R I E S ,
B U S I N E S S E S , F U N C T I O N S , A N D J O B F A M I L I E S
• Global consistency is one of
the key objectives of
implementing job evaluation
– Our survey results
demonstrate that job
evaluation helps to a great
extent in creating a
common language for
defining jobs across
businesses and
geographies, and
maintaining consistency in
job and title structures.
Based on 129 responses.
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R E T U R N O N I N V E S T M E N T
R E S O U R C E M A N A G E M E N T
• The majority of respondents
either strongly agree or agree
that implementing job
evaluation has paid off in
reducing the risk of
misallocating resources and
ensuring an ensuring an
optimal ROI in people.
• This result provide hard
evidence for good reasoning
and a strong business case.
Based on 130 responses.
Percentage of Organisations
Strongly Agree or Agree 67%
Neither Agree nor Disagree 26%
Disagree or Strongly Disagree 7%
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R E T U R N O N I N V E S T M E N T
T I M E T O R E A L I S E B E N E F I T S
• The majority of respondents (80%)
report that it takes up to three years to
realise a job evaluation project’s ROI.
Based on 117 responses.
Note: The total does not equal 100% due to rounding.
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R E T U R N O N I N V E S T M E N T
L E N G T H O F G R A D I N G P R O C E S S
• The length of the grading
process is significantly
reduced by using a job
evaluation system.
• The process is improved
significantly due to a
robust and consistent
approach and tools with
less resources involved.
• The proportion of
organisation who complete
the process in less than
three days has more than
doubled. The proportion of
organisations who need
more than four weeks has
reduced by two-thirds.
Based on 97 responses. Based on 114 responses.
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R E T U R N O N I N V E S T M E N T
C O S T S S A V E D P E R Y E A R
• Job evaluation allows for job
grading process costs primarily
due to a defined global
governance that includes an
improved grading process,
technology, and tools. It also
provides a clear definition of
roles and responsibilities, which
leads to less resources involved
in job evaluation and grading.
• Companies that achieved cost
savings after implementing job
evaluation, close to one-third
achieved cost savings of over
10%.
Based on 101 responses.
Based on 85 responses.
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R E T U R N O N I N V E S T M E N T
R E L I A B L E C O M P E N S A T I O N A N D B E N E F I T S
D E C I S I O N S
• Job evaluation plays a crucial
role in supporting the design
of reward packages
• Nearly all (96%) respondents
either strongly agree or agree
that job evaluation supports
reliable compensation and
benefits decisions
• Only 3% are neutral, and 1%
disagree
Strongly Agree or Agree 96%
Neither Agree nor Disagree 3%
Disagree or Strongly Disagree 1%
Percentage of Organisations
Based on 128 responses.
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R E T U R N O N I N V E S T M E N T
A N N U A L C O M P E N S A T I O N A N D B E N E F I T S S A V I N G S
• For eight out of 10 respondents,
effective job evaluation has helped
achieve labour cost savings.
• Three-quarters (75%) of participants
claim savings of up to 3% of labour
costs when designing reward packages
by using job evaluation.
• Eleven percent of respondents achieved
cost savings of more than 5%.
Based on 108 responses.
Based on 90 responses.
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R E T U R N O N I N V E S T M E N T
I N I T I A L L A B O U R C O S T S A V I N G S O B S E R V E D
( W I T H I N T H E F I R S T Y E A R )
• 7% of participants claim they
achieve savings in the first year of
implementing a job evaluation
system.
• For the majority (88%) of
respondents, the implementation
of job evaluation did not increase
or decrease labour costs within
the first year.
• Labour cost savings become
substantial in the subsequent
years due to provision of a
structured and consistent
approach to the annual
compensation review.
Based on 107 responses.
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THE BENEFITS OF JOB
EVALUATION
HOW CAN THEY BE
LEVERAGED FURTHER?
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H O W J O B E V A L U A T I O N C A N I M P R O V E D A Y - T O -
D A Y B U S I N E S S A N D O P E R A T I O N S ( 1 / 2 )
• Job evaluation is at the core of all HR processes and allows an open and transparent
communication process with employees:
– It gives a clear benchmark for global and regional reporting to accurately assess the
size/strength of the organisation.
– Job evaluation improves common global understanding of “relative” job levels across
countries and regions.
– Job evaluation supports a persuasive argument when discussing organisational structures
and job levels, and involves managers, letting them understand how jobs can be made
comparable.
– It allows us to build systems on common tools and policies due to common agreement.
– With job evaluation, it is possible to have a strategic discussion within management on
workforce investment and competence gaps.
– For a global organisation, job evaluation has become a common language. Managers, as
well as HR, require benchmark analysis for their decision making process when recruiting
and performing compensation reviews. It is very important and appreciated in the recruiting
process.
– It improves HR’s reputation (more influential).
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IPE Job Evaluation
Development / Succession
Planning
• Consistent approach in
succession plans analysis
Organisational Design
• Better understanding of
existing organisational
models at the company
Resourcing
• Increased visibility on jobs that
are in the process of
resourcing
Mobility / Job Rotation
• Framework for international
employee mobility providing
clarity across businesses,
functions as well as regions
Recruitment
• Framework to launch a recruitment process on job and position levels in the organisation
Compensation
• Structured approach and
relationship between job
content and pay, as well as
better insight on external pay
practices
H O W J O B E V A L U A T I O N C A N I M P R O V E D A Y - T O -
D A Y B U S I N E S S A N D O P E R A T I O N S ( 2 / 2 )
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T IPS FOR MAXIMIS ING
JOB EVALUATION VALUE
WHAT CAN YOU DO?
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T I P S F O R M A X I M I S I N G J O B E V A L U A T I O N V A L U E
A R E A S F O R I M P R O V E M E N T • The following have been identified as areas where companies state they are sub-optimal in
relation to job evaluation:
– Communication: Gain awareness, understanding and acceptance of all stakeholders involved
– Governance: Understand that governance is more than just a process. It should include a detailed
description of
- Job evaluation / grading principles and rules
- Process
- Roles and responsibilities
- Methodology and tools
– Job evaluation / grading expert: Keep the ‘big picture’ in mind and talk ‘business’ to justify results
– Training / certification: Establish one common training and certification process globally
– Job architecture and reference jobs: Leverage evaluation results and/or define standards, if
reasonable
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Q&A
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Q & A
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David Wreford [email protected]
Mark Bonsels [email protected]
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