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Employers Pursue Global Grade Structures, Despite Challenges
 

By Stephen Miller, CEBS  9/19/2011

Global leveling—the process of establishing the relative value of jobs and their corresponding pay ranges systematically worldwide—is providing a framework for multinational companies to implement talent and compensation management effectively across borders.

According to HR consultancy Mercer’s 2011 Global Leveling Survey, the primary objectives for evaluating jobs and implementing a global grade structure are to support the development and career paths of employees (68 percent) and to facilitate the implementation of a global pay or rewards program (65 percent).

Primary Objectives for Implementing a Global Grade Structure

Support career pathing and employee development

68%

Facilitate implementation of global pay or rewards programs

65%

Facilitate talent mobility

50%

Reinforce common organizational culture and values

48%

Support/incent cross-country business collaboration

28%

Manage costs

24%

Get greater value from global HRIS or ERP

13%

Source: Mercer.

“Beyond simply helping with pay decisions, companies are seeking much more from their global leveling strategies, such as defining employee career paths, linking jobs to specific behavioral competencies and assessing pay equity,” said Darrell Cira, a partner with Mercer’s human capital consulting business.

Conducted in the summer of 2011, the survey includes responses from more than 380 organizations across all industries in the U.S. and Canada.

While global leveling long has been used for companies’ executive roles, an increasing number of organizations are implementing grade structures for their other employee groups. Mercer’s survey shows that 85 percent of organizations report grade structures for executives and just as many for managers and nonsales professionals.

“Years ago, only about half of multinational companies had global grade structures for employees that weren’t executives,” Cira said. “This increase in the use of global grading for populations other than executives is likely directly related to organizations’ focus on facilitating talent mobility and implementing meaningful career paths for their employees.”

Global Leveling Challenges

According to Mercer’s survey, more than one-third (36 percent) of organizations expect to modify their current approach to global leveling or implement a new compensation management structure in the next two years.

The biggest obstacles organizations face with employing a global grade structure are resources and time, reported by almost two-thirds (63 percent) of organizations. These challenges are followed by the absence of a global HR information system (40 percent) and leadership resistance (38 percent).

Challenges with Implementing a Global Grade Structure

Resources/time to develop and implement

63%

Absence of a global HRIS

40%

Resistance at local or line-of-business level

38%

Experience/skills of local HR staff

32%

Absence of a global compensation strategy

21%

Experience/skills of global HR function

18%

Lack of support from corporate leadership

8%

No clear business case

7%

Source: Mercer.

“The barriers to implementing global grades have changed considerably,” said Cira. “While the absence of a strong business case and lack of support from corporate leadership were frequently identified as major challenges in the past, the value of having a global grading structure has clearly become more evident to business leaders today.”

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related Articles:

Salary Structures: Creating Competitive and Equitable Pay Levels, SHRM Online Compensation Discipline, November 2011

Building a Market-Based Pay Structure from Scratch, SHRM Research, December 2008

How to Create Salary Ranges, SHRM Research, March 2009

Rewarding Employee Contributions, Not Job Titles: A Base Pay Strategy to Retain Peak Performers, SHRM Online Compensation Discipline, January 2007

Multinationals Embrace Centralized Compensation Structures, SHRM Online Compensation Discipline, September 2006

Managing Direct Compensation, SHRM Online Compensation Discipline, April 2003

Broadbanding, SHRM Research, July 2002

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