mercer 2008 zilvinas akelis presentation

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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

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Page 1: Mercer 2008 Zilvinas Akelis Presentation

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

Page 2: Mercer 2008 Zilvinas Akelis Presentation

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

Page 3: Mercer 2008 Zilvinas Akelis Presentation

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

Page 4: Mercer 2008 Zilvinas Akelis Presentation

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

Page 5: Mercer 2008 Zilvinas Akelis Presentation

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

Page 6: Mercer 2008 Zilvinas Akelis Presentation

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

Page 7: Mercer 2008 Zilvinas Akelis Presentation

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

Page 8: Mercer 2008 Zilvinas Akelis Presentation

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

Page 9: Mercer 2008 Zilvinas Akelis Presentation

Mercer surveys –relevant support for salary system development

Page 10: Mercer 2008 Zilvinas Akelis Presentation

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

Page 11: Mercer 2008 Zilvinas Akelis Presentation

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.

Page 12: Mercer 2008 Zilvinas Akelis Presentation

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

Page 13: Mercer 2008 Zilvinas Akelis Presentation

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.

Page 14: Mercer 2008 Zilvinas Akelis Presentation

Mercer offer in the Baltic countries

Page 15: Mercer 2008 Zilvinas Akelis Presentation

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

Page 16: Mercer 2008 Zilvinas Akelis Presentation

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

Page 17: Mercer 2008 Zilvinas Akelis Presentation

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)

Page 18: Mercer 2008 Zilvinas Akelis Presentation

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?