When a global specialty chemicals and materials company doubled in size through an acquisition, they believed Hay Group was the firm best positioned to assist them in developing a new compensation structure to be implemented in just one year.
Through job evaluation and benchmarking, Hay Group was able to implement a structure that would fix the company’s current problems and also carry them into the future successfully. Hay Group worked with them to build job family models to help define criteria for promotion, add new jobs, maintain the pay structure, and remain a cutting-edge leader on compensation in a competitive industry.
The end result was a great success. The organization has seen numerous benefits from the project, including:
- a common language everyone speaks about grades and levels: “We now have an integrated company,” says the company’s director of total global rewards
- a common basis for determining locally-competitive base salaries, long-term rewards, and annual incentives
- greater ease in managing compensation
- improved organizational efficiency
- better alignment of pay policies with internal value considerations
- more efficient use of bonus plans.
After the acquisition, the company found itself juggling different human resources programs and reward structures. Efforts to move managers and executives from country to country were inelegant and inconsistent with regard to pay, job titles, perks, and job descriptions.
“The company was scattered,” says the director of global total rewards. “There were too many levels. There was no consistency.” Furthermore, with no career paths established, their leadership feared losing talented and ambitious employees to the competition.
Even so, he says there remained some internal resistance to the business change. “Some people didn’t understand what was going on. There was fear that pay would be cut.”
To ease employee fears, the company took its first step by forming a communication plan, which explained the project’s benefits to everyone via email, newsletter, telephone, and informal talks about what to expect during and after rollout. Managers and executives bought in and applied themselves to explaining job grades, salary ranges, and individuals’ placement in the range with every one of their employees.
“We talked with people who were overpaid,” says the director. “We explained they wouldn’t get a pay cut. First, they were shown that they’re overpaid not just at our company, but relative to the entire industry. Then they were shown how they could move up to the next grade.”
Transparency, fairness, clarity
Facing compensation-related challenges as a newly-fledged global organization, they turned to Hay Group for its widely used and proven job evaluation and reward methodologies.
Hay Group interviewed their top leaders to understand the new operating model, and reviewed strategic plans, organization charts, and job documentation for 3,000 employees, ranging from top executives through managerial and professional workforce. Hay Group benchmarked 150 executive, management, and professional jobs—and rated every job in the organization so they could slot each job relative to the benchmarked positions.
Hay Group mapped all positions into appropriate grades, with the benchmarked jobs becoming points of reference for future jobs. They also helped the organization determine appropriate pay ranges and developed specific descriptors for each grade level to help them value future jobs.