TM - August 2008 - (Page 29)

Strategic Global Pay Program Implementation Corinne Carlson Companies have diverse reasons for adopting global compensation strategies. Whether to improve their compensation processes, reinforce organizational values, facilitate talent mobility, manage costs or enhance governance and reporting, more ﬁrms are going global with their compensation systems. Mercer’s 2007 survey on global compensation design and administration found 60 percent of surveyed companies have put global compensation strategies in place, while 22 percent are considering doing so. Organizations that introduce more compensation structure and control from headquarters tend to see tangible and immediate ROI, including better alignment of actual pay with market. A global strategy also enhances the ability to strike better deals in joint ventures, acquisitions and start-ups. Organizations without global structures and policies often are reactive and establish or accept suboptimal practices that are not in their best interests or in sync with corporate principles. For instance, they may provide guaranteed payments that are not required and that would be better utilized as performance-based incentive payments. Or they may pay in the 75th percentile for all jobs when corporate policy indicates such pay is for critical jobs only. Mercer recently completed a project with a midsize multinational organization that employs nearly 4,000 people in more than 40 countries. The company’s objectives were to introduce more discipline in managing pay, improve satisfaction with and credibility of the compensation system through less reliance on volatile market data and create a stable, ﬂexible pay system to address unique international needs. This required: • Introduction of global job identiﬁcation and consistent job titling. • Development of global job levels or grades. • Creation of salary structures and pay ranges for each grade by country. • Use of local market data to support the pay system. • Implementation of technology and tools to support ongoing management. A key to success in this effort required all the stakeholders work together. The ﬁrm’s senior leadership took responsibility for helping educate and inform, while senior HR leadership provided project sponsorship, dedicated resources and project management. Talent managers functioned as liaisons with businessunit managers to ensure the new global compensation system would meet their needs and be easy to use. Finally, a project team of compensation experts owned the pay-management system, acted as trainers for the global rollout and led the socialization of the process for the global HR team and business partners. The project was a ﬁve-step process, slated for an approximate six-month period as follows: 1. Plan project and develop communication strategy. 2. Create standard evaluations for critical jobs. 3. Design global job-level structure. 4. Evaluate local jobs. 5. Develop salary structures and implement compensation management system. The actual timing of the project stretched somewhat due to challenges. For example, the global job-level structure design required a three-month window instead of the planned one-month time frame. The ﬁnal implementation also took an additional two months. The system was up and running in less than a year, despite requiring signiﬁcant evaluation, database development, training and analysis across geographies and functions. Currently, the global compensation system spans its operations as intended. It has led to the creation of job codes, the introduction of one global salary adjustment process and the implementation of an online pay administration tool. Talent managers had to be willing to sacriﬁce time for quality and to involve key stakeholders throughout the process. Flexibility also was required to address cultural diversity. Ultimately, organizations must accept that a global compensation strategy is never ﬁnished. It must evolve as a company grows. Corinne Carlson is a principal in Mercer’s Chicago ofﬁce and is responsible for helping U.S. multinationals with global total rewards, strategy and design. She can be reached at editor@talentmgt.com. talent management magazine www.talentmgt.com 29 http://www.talentmgt.com

Table of Contents Feed for the Digital Edition of TM - August 2008

TM - August 2008 Editor's Letter Contents Human Performance Leading Edge Foundations Global Background Screening Does Global Assessment Work? Global Total Renumeration: Creat One Organization Border Insecurity: Immigration Reform and Talent Management The Global Workforce: Communication Across Cultures Around the World in How Many Days? Insight: Exelon: Performance Under Pressure Special Report: Perspectives on Managing People Application: Reinventing Sales Rewards at Motorola Dashboard: Mideast Meets West Dashboard: Mergers and Acquisitions 2008 - Don’t Leave Employees Behind Editorial Resources Advertisers' Index Full Potential

TM - August 2008

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