Has anybody worked with Mercer's International Position Evaluation System (IPE)?

[RISP]

Hello. I was wondering whether anybody on this board has experience with Mercer's International Position Evaluation System (IPE). We have some (former) HR professionals, as well as many middle and senior managers, so I guess some of you may have come across it during your careers.

Very briefly, as I understand it, IPE assignes a "point value" to every position. A Manager's position could have an IPE level of 52-56, a Director position starts at 58, and so on. This is not linked to the person or their performance, but only to the job. Every level is connected with a reference salary and max bonus. The reference salary is updated once a year for every country, and that data comes from Mercer, I believe.
Starting from the reference salary, there is a salary range of +/-20%. HR guidelines say that new hires or newly promoted employees should start at ~80% of the reference salary, and everybody should be within the 80-120% range.

My employer is using IPE, and I'd like to understand better how strictly it is usually followed. Here at megacorp, being in the upper part of your IPE range is frequently used as an argument against raises or COLA adjustments (e.g., no COLA for employees >120%, reduced adjustment for those 100-120%). Strangely, being at or below 80% seems to be much less of a problem, and doesn't mean excellent performance should earn you a raise.

Also, does anybody have access to 2015 salary levels for Germany and would be willing to provide some numbers (here or via PM)? I know the 2013 reference salary for my IPE level, but I have no idea how that changed during the last two years. HR doesn't want us to know (they prefer to keep us dumb), so I cannot aquire this information internally.

Many thanks to everybody who is willing and able to contribute something.

 

[pb4uski]

No idea on Mercer, but at the Mega that I worked at it was not unheard of for people who were towards the top end of the salary range for their position to get lower or no raises than those who were more mid-range with similar performance. As a manager, since bounses were at my discretion I was usually able to throw a little more bonus than they might otherwise get their way to try to make up for it at least in part.

 

[msbearkeley]

Have worked with Mercer but not the specific tool you mentioned. However what you described is how compensation plans are designed and how well run organizations implement it.

By design, it allows less experienced / qualified individuals to get a bigger portion of the merit increase pool (as a percent relative to their base) to get to 'market rate' and those with more experience / above market, not get too far ahead of the median pay for a given job and location. Mercer reviews the ranges annually to make sure averages are in line with the market. If done well however, ranges do not change at all. Your salary increases each year is generally a reflection of your level's share of the merit pool (COLA or inflation & productivity growth plus industry / country trends if significant) (at least 3percent per article below) and your performance relative to your peers. Bonus and other incentive comps are the tools that managers have to differentiate top performers without long term impact to base salary. Of course if you are promoted, then your job will changes and your increase then reflects the range for that new job.

http://www.economist.com/news/europ...ven-if-fundamentals-are-strong-watching-wages


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[RISP]

Mercer reviews the ranges annually to make sure averages are in line with the market. If done well however, ranges do not change at all.

I don't get that part. Doesn't the median salary, and consequently the range, trend upwards at least at the rate of inflation (+ possibly productivity growth)? If the article you quoted is correct, and there is a growing shortage of skilled labour, the annual growth rate should be even higher.

Hence, I would expect the median salary 2015 for IPE level x to be higher than the median salary 2013 for IPE level x, no?

 

[Bestwifeever]

This thread makes my stomach hurt. So glad to be FIREd.

 

[RISP]

This thread makes my stomach hurt. So glad to be FIREd.

That's actually one of the more entertaining office topics I'm having at the moment.

 

[msbearkeley]

I don't get that part. Doesn't the median salary, and consequently the range, trend upwards at least at the rate of inflation (+ possibly productivity growth)? If the article you quoted is correct, and there is a growing shortage of skilled labour, the annual growth rate should be even higher.

Hence, I would expect the median salary 2015 for IPE level x to be higher than the median salary 2013 for IPE level x, no?

The market average is an average of actual salaries reported in the survey (resulting from increases over the last year). Ranges are designed to be wide and actually overlap with each other so it stays the same despite market changes (and probably to help HR folks like me who are not yet FIREd can keep employees confused about it and give us the job security we need until we actually can retire!)


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[RISP]

The market average is an average of actual salaries reported in the survey (resulting from increases over the last year). Ranges are designed to be wide and actually overlap with each other so it stays the same despite market changes (and probably to help HR folks like me who are not yet FIREd can keep employees confused about it and give us the job security we need until we actually can retire!)

Sorry, that doesn't make any sense. In any normal, non-deflationary environment, average salaries for most any given position increase over time. Consequently, the market average for any given position must be trending up.

If Mercer are doing what you imply, keeping the averages stagnant, they will report unrealistic "market" salaries to their customers after a few years. That cannot be in the interest of any decent HR department.

 

[redduck]

Hey, that's Don Mossi !!!

 

[msbearkeley]

Sorry, that doesn't make any sense. In any normal, non-deflationary environment, average salaries for most any given position increase over time. Consequently, the market average for any given position must be trending up.

If Mercer are doing what you imply, keeping the averages stagnant, they will report unrealistic "market" salaries to their customers after a few years. That cannot be in the interest of any decent HR department.

Ranges, not averages are designed to remain generally consistent bSed on the job. Market averages fluctuate based on actual averages reported on wage surveys.


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[rodi]

Have worked with Mercer but not the specific tool you mentioned. However what you described is how compensation plans are designed and how well run organizations implement it.

Unless it's not so well run.
I worked for a megacorp that had regional offsets in high COLA areas. At one point they decided that COLA didn't matter - only cost of labor. They also moved away from trying to be at the "above average" for labor to "in the average range" for labor - so we got shifted to the national salary scale and our mid-ranges were shifted to at or below national averages (which was much lower than San Diego.)

They didn't take any money away - but we were all slammed to the top end of the pay ranges so we had several years of 0% raises. Literally 80% of the campus got no raise the first year they implemented this new policy. The CEO looked like a deer in the headlights when he came to town for a town hall and I asked him what his plan for attrition of the "best and brightest" was given the zero increase environment he'd created. 200 people erupted in applause at the question.

Well implemented programs (to use your term) often have consequences that HR and Execs miss.

 

[ShortInSeattle]

Wow. This brings me back. I haven't seen a points-based comp system since the 90s. I was trained on the IPE back in college.

To answer your question on how strictly they are followed, I can offer only a few generalities.

Your HR folks are likely to follow the system as strictly as they can, as they are concerned with consistent application of the system and with avoiding discrimination complaints.

Your senior managers (and some recruiters) are likely to "push" HR for higher pay within the ranges for exceptionally talented folks or those with a hard-to-replace skillset. The degree to which the system can be flexed by such pushes depends on the rigidity of your bureaucracy and how badly they want a particular person. Most "exceptions" seem to happen at the time of hire, not mid-career from what I've seen.

Even within a points based system, politics still have an impact. A powerful VP arguing your case (because they fear your departure) is going to have more success than negotiating with rule-following HR.

SIS (formerly of the rule-following clan)

 

[RISP]

Hey, that's Don Mossi !!!

That's right!

Ranges, not averages are designed to remain generally consistent bSed on the job.

LOL. That's not how math works. Again: The median salary is a market rate. The range is +/-20% of that median. Market rates increase over time - the average manager at IPE level 56 is making more today than the average manager at IPE level 56 made 20 years ago.

Tell me where you disagree, and we'll work from there. Or are you working for my employer and trying to keep me confused?

 

[RISP]

Unless it's not so well run.
I worked for a megacorp that had regional offsets in high COLA areas.

That's something we lack. Given that megacorp uses just one median salary per IPE level for all of Germany, this gives me one more argument why I should be in the upper ranges (I live in a pretty high COL area). Thanks!

 

[Options]

Mercer (et al). Egad. Instant heartburn. I'll lay it on the line. These consultants know which side of the bread is buttered and by whom. Hint: it's not the employees. This is what they do. Come in with their concepts with all sorts of unintended consequences but one I've never failed to see is a sanitized workplace in one way or the other.

I've said it before, but in the struggle between labor and capital, labor has lost. Carefully inspect any new "program" related to compensation, benefits, or terms of emloyment your employer rolls out or offers. There's a very good chance it will not be in your favor.

 

[msbearkeley]

That's right!



LOL. That's not how math works. Again: The median salary is a market rate. The range is +/-20% of that median. Market rates increase over time - the average manager at IPE level 56 is making more today than the average manager at IPE level 56 made 20 years ago.

Tell me where you disagree, and we'll work from there. Or are you working for my employer and trying to keep me confused?

Ha! You found me out! That was the other secret HR folks have! Maybe now I can get laid off and retire!

I am sure megacorp will take good care of you. Compensation is not a science...it's an art. If they want you to be happy, your boss will be creative and give you what you deserve, even if It has to be outside the guidelines set by HR. Good luck!


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[rodi]

Carefully inspect any new "program" related to compensation, benefits, or terms of emloyment your employer rolls out or offers. There's a very good chance it will not be in your favor.

That was my experience... and I paid very close inspection to figure out how they were removing benefits/comp with each change in benefits/comp. It was a very steady decline in total comp. If you questioned anything (which I did) you were told "be lucky you have a job.". Despite my big mouth that questioned authority, I stayed employed while the company RIFed more than half of their headcount. My managers actually started coming to me to see my take on how we were being screwed over.

 

[Brat]

I have worked with those points-based comp systems in that past, at its root the Federal GS grade system is points-based. One of their weaknesses they do not handle hard to find skill sets or creative/innovative employees.

A system such as that factors in COL for specific markets. Some jobs are regionally, even nationally, based pay.

As many have seen in the last 5 years pay is not driven by inflation. Compensation Managers survey benchmark jobs every couple years and place them on a matrix. Other jobs are fit into that matrix based on reporting relationships and/or points.

 

[RISP]

Thanks for all the replies re: flexibility of the system. I called in a personal favor and can now answer my second question myself: The median salary for my IPE level has increased by 2.8% over the last two years. Not huge, but not insignificant either.

The inflation rate for Germany was 1.5% in 2013 and 0.9% in 2014. So, yes: Median salaries do increase with inflation (or slightly more).

 

[Totoro]

Salaries in Germany in general have gone up the most since a few years, saw some statistics earlier this week. A little above inflation, so that would match your experience.

For what it's worth you can try glassdoor.com. Not superreliable but gives an indication. US stats are a bit better. The german government also for sure has general statistics, and you can derive averages usually also from your company annual report.

In my experience (Mercer and Towers Watson) the point system is used in their consulting and search business also. What a company does with it is a choice they make, but in general most mega-corps use a tenure based band + job level structure, makes it easier. Every once in a while they hire the HR consultants to recalibrate and decide where they want to be (above market, at market, etc ..). Or they collude with competition

As always, exceptions are made mainly for the 5% star performers.

Rank and file get initial raises, then basically flatten out. It's why switching megacorps frequently makes sense: you can negotiate a better band. Cheaper for the company too: most people don't like to switch. It's the game.

Source for all this is my management consulting streak, fwiw.