Aligning Salary Structures in an International Context

Successful job applicants accept job offers because the offered salary is competitive. Employee benefit is a hygiene factor. To establish competitive salary levels, the Company needs to have correct information on what similar businesses or general businesses is paying for specific jobs.

Consulting companies, like Hay, Tower Watson, Mercer, Hewitt, Radford, Mc Lagan makes money by collecting salary and benefits information from companies, analyses and organizing the collected data and provide the resulting information back to the participating companies.

To set up a job structure, these consulting companies each has develop its own job evaluation system, usually a point system, to be used as a tool to value jobs in terms of job worth.

In the hierarchical organization, salary structures mimic the organizational structural layers in terms of different job grades, also known as job levels. Clients use the information that they bought from the consulting companies to develop a hierarchical of salary ranges that align with these job grades. The result is a salary structure. Here is some information about the job evaluation methodology used by these consulting companies. Each methodology is proprietary.

VENDOR NAME OF METHODOLOGY FACTORS TOOLS
Hay Group Hay Job Evaluation System (a)Know How(b)Problem Solving(c)Accountability

(d)Note: Some organization add a fourth factor –

“Working Condition” or “Additional Work Elements”

Hay Guide Charts
Mercer International Position Evaluation System (IPE) (a)Impact(b)Communication(c)Innovation

(d)Knowledge

(e)Risk

IPE Points and IPE ClassMercer Prism (electronic tool)
Aon Hewitt Job Link (a) Knowledge and application(b)  Problem solving(c)   Interaction

(d)  Impact

(e)  Accountability

Job Link (electronic tool)
Tower Watson Global Grading System (GGS) (a)  Functional knowledge(b) Business expertise(c)  Leadership

(d) Problem solving

(e) Nature of impact

(f)  Area of impact

(g) Interpersonal Skills

TalentReward (electronic tool)

Practical issues will arise under the following circumstances.

(a)    When the organization is a conglomerate, with business sizes, different organizational structure and different jobs. An example is Sumitomo Corporation.

(b)   When the organization has businesses (subsidiaries, representative offices and joint ventures) internationally.

(c)    When the organization decides to change the consulting firm from which it buys the market salary data and whose job evaluation methodology it uses. An example is the organization uses the Hay methodology to evaluate its job and buys compensation data from Towers Watson because the participants in Towers Watson’s salary survey are its primary business competitor.

One of the practical issues is attempting to correlate two different job evaluation systems, for example hay job evaluation and mercer job evaluation system. Someone came up with the idea of a correlation table. This makes it difficult to move from one vendor to another vendor.

This problem can be resolved by first having a one tall enough model of a job structure. Next, you then use this model for alignment. Whichever compensation consulting company that you want to engage, do not pay them not to evaluate the jobs in your organization. Instead engage them to align their job classes or levels with your job structure. Third, you can slot or pigeonhole your actual jobs using the actual job holder’s job description into the job classes or levels provided by your chosen vendor. This matching is completed by finding the vendor’s job description closest to that of the job incumbent’s job description. You are looking for a 70 percent match. After all, this is an art, not a science.

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