Local salary survey methodology workshop

1. Local salary survey methodology workshop Compensation and Classification SectionHuman Resources Policy ServiceOffice of Human Resources ManagementUnited Nations Secretariat

2. Local Salary Survey Workshop 9:30 – 12.30 1. Compensation at the UN: - The Flemming Principle - Key actors in Local Salary Administration 2. Overview of local salary survey methodology - Defining the Market - Categories of duty stations - Four phases of the comprehensive salary survey 13.30 – 16.30 3.Phase I: Preparation - Selection of employers - Job inventory - Gathering local information Day 1

3. Local Salary Survey Workshop 9:00 – 12.30 4.Phase II: Data Collection - Interview preparation - Questionnaire and Interview DOs and DON’Ts - Job matching 13.30 – 16.00 - Data on salaries, allowances, and benefits - Data quantification - Determination of net income Day 2

4. Local Salary Survey Workshop 9:00 – 12.30 5.Phase III: Data Analysis - Individual employers - All employers - Selection of best employers/jobs 6.Phase IV: Salary Scale Construction - Labour market profile - Local UN Community values - Balanced salary scale 7. Computation of UN allowances - Dependency and other allowances 8. Interim adjustments 9. Employer Report 10. Special measures Day 3 13.30 – 16.00

5. Introductions

6. Our learning objectives Key principles of the methodology Roles of survey participants 4 Survey phases Preparation Data collection Data analysis Construction of salary scale Interim survey process

7. Compensation is… For management: …a powerful tool to influence employees’ behavior. For employees: …a source of economic and sometimes psychological income.

8. Task of the Administration “…To develop policies and procedures that will attain maximum return on investment, in terms of attracting, satisfying, retaining and perhaps motivating employees…”

9. Factors impacting compensation policies Government laws Labour agreements Labour market trends Cost (ability vs. inability to pay) Etc..

10. Forms of compensation Direct wages and salaries (“pay”) benefits Indirect pension insurance paid time-off, etc. benefits (in kind)

11. What pay-based system to use? a) Job-based b) Seniority c) Merit d) Mixed What pay policy to use? a) equal to market ? b) above or below the market ? Issues faced by management

12. Compensation - example How would you compensate for these services?

13. Compensation in the United Nations

14. Noblemaire vs Flemming International staff - worldwide recruitment - serve in different countries - system of remuneration able to recruit from all member states, including highest paid - Noblemaire principle is based on highest civil service - maintaining purchasing power parity (post adjustment system) - base pay set in US$ • Local staff - local recruitment - serve at the same duty station throughout the career - system of remuneration able to recruit from the local market - Flemming principle is based on the best prevailing local conditions found in the locality • salary surveys conducted to establish salaries based on the best employers • pay set (mostly) in local currency.

15. Compensation in the United Nations Original definition Compensation for locally recruited staff should reflect the best prevailing conditions found in the labour market for similar work.” Subsequent ICSC refinement “The conditions of service, including both paid remuneration and other basic elements of compensation, are to be among the best in the locality, without being the absolute best.”

16. Compensation in the UN system Achieving the goal of best prevailing conditions by means of Conducting salary survey with employers in the same labor market who recruit staff of equally high caliber and qualifications for work which is similar in nature and equal in value. Survey of : - salaries - allowances - fringe benefits - other conditions of employment

17. UN Salary Survey Methodology Methodology endorsed by the General Assembly The methodology: - Defines the labour market relevant to the category of staff; - Provides technical guidelines for: Evaluating local market conditions; Identifying leading employers; Comparing UN salaries vs employers salaries To ensure that UN salaries reflect best prevailing conditions of employment.

18. Key Actors in Local Salary Survey The International Civil Service Commission (ICSC); The Responsible agencies (UN, WHO); The Coordinating agencies (UNDP, UNICEF, WHO, etc); The Compensation Officer (survey officer/specialist); The Local Salary Survey Committees (LSSC); The UNHQ Steering Committee.

19. Establishes methodology Reviews methodology after each survey round (5-7 yrs) Monitors the implementation of the methodology Participates in reviews/approvals of surveys in HQ Salary Steering Committee Roles of key survey actors ICSC

20. Overall responsibility for approving local salary scales Appoints survey specialist Overviews application of methodology Guides LSSC on survey matters Supervises data collection Performs analysis of survey data Approves outcome of surveys Provides written reports (preparatory, survey, employers) Roles of key survey actors ResponsibleAgencies (UN, WHO)

21. Usually the agency with the largest number of staff members Establishes the Local Salary Survey Committee (LSSC) May provide comments for review by the responsible agency Roles of key survey actors Coordinating Agency

22. Guides the LSSC in the conduct of salary surveys, especially at data collection, data analysis, and scale construction phase Has delegated authority to make on-the-spot decisions about survey technical matters Participates in data collection as team leader Reviews preparations by LSSC Presents survey results to the UNHQ Steering Committee Roles of key survey actors Compensation Officer/Survey Specialist

23. Chairperson must be internationally recruited Collects and provides staff statistics Proposes employers Reviews social, labour and tax laws Selects survey team members Contacts employers & sets interviews Should have a balanced representation of management and staff Provides comments on survey findings for UNHQ Steering Committee Roles of key survey actors Local Salary Survey Committee (LSSC)

24. Reviews issues & findings of the survey Roles of key survey actors UNHQ Steering Committee (UN, UNDP, UNICEF, ICSC)

25. Overview of the methodology

26. The UN salary survey methodology UN methodologies reviewed in 1993, 1997, 2003 and in 2011 to: Harmonize the HQ and non-HQ methodologies Harmonize treatment of UN staff across duty stations Strengthen the credibility and competitiveness of national staff salaries

27. The non-HQ salary survey methodology Major changes: Differentiation of labour markets Prior to 1992: Five Best employers 1992: Seven Best employers 1997: 3 categories (5, 7, and 12) 2004: 4 categories (5, 7, 10, and 15, depending on degree of dynamism and level of sophistication of the labour market) 2011: same as 2003 though have introduced the “non survey” as a 5th category for those duty stations with less than 30 General Service staff

28. The non-HQ salary survey methodology Major changes (cont.): - Para-statal organizations must have their conditions of employment established by the Government, otherwise considered “private” sector National Civil Service (NCS) defined as Ministry of Foreign Affairs . NCS must be retained as comparators for certain duty stations. Periodicity of comprehensive survey is now every 5 years Minor in-kind benefits are no longer quantified as they cannot be considered “basic” elements of compensation, eg. beverages

29. The non-HQ salary survey methodology Major changes (cont.): - Meal benefit should be quantified on the basis of cost to the employer Revised benchmark job descriptions, including IT jobs and benchmarks for National Officer category The management representative in the interview team must be internationally recruited, otherwise this role is not occupied Re-enforced requirements for public/private sector, sector representation, number of employers to be surveyed

30. The non-HQ salary survey methodology Major changes (cont.): - NO-D grade level no longer surveyed . NO-D salary levels extrapolated. Relaxed criteria for retention of employers in the NO category when also surveyed for GS category Salary data from employers to be weighted on the basis of size of the employer Possibility to purchase external data to complete a survey when insufficient employer participation (applicable to cat 10 & 15 employers retention only)

31. The non-HQ salary survey methodology Major changes (cont.): - Cars should only be quantified when the car is available substantially for personal use . The benefit should be treated as taxable and non-pensionable Six duty stations previously under the non-HQ methodology will now be surveyed under the HQ methodology though approved by the Responsible agency (Bonn, Brussels, Copenhagen, the Hague, Tokyo, Washington DC)

32. External data Data purchased from 2 external vendors Type of data Market salary movement data as a residual to complete a survey

33. Purchasing external data -conditions To be used as aresidual source when cannotsecure the participation of the required number of employers Only applies to category I and II duty stations All employers surveyed must be retained (i.e no selection of the “best”) The employers surveyed must still comply with requirements concerning public/private sector and economic sub-sector (25% limitation) Survey result is weighted average of the result of internal comparison using usual basis and the external movement data

34. Criteria for the Differentiation of Labour Markets Overall labour market size Presence of suitable employers Conduciveness to start and operate business Overall socio-economic climate Size of UN population at the duty station(greater or less than 30 General Service staff)

35. Categories of Duty Stations Category I: 15 employers retained e.g. China(*), Malaysia(*), South Africa(*), Thailand, Indonesia Category II: 10 employers retained e.g. Bulgaria(*), Jordan, Senegal, Vietnam(*) Category III: 7 employers retained e.g. Angola(*), Benin, Ethiopia(*), Peru(**), Sudan (*), Yemen(*) Category IV: 5 employers retained e.g. Afghanistan, Chad, Haiti, Mongolia, Zimbabwe (**) Category V: No survey e.g. Mauritius, Malta, Australia, Oman (*) and (**) revised from 2003

37. Life cycle of salary surveys Comprehensive surveys are now at 5 year intervals. 5-6 months prior to the comprehensive survey: authorization package sent, time to establish the LSSC, identify comparators, collect requested data 1-2 months prior the established date of the survey: time to make appointments with potential comparators

38. Life cycle of salary surveys (cont.) Ideally, data collection is completed prior to the specialist departing from the duty station. Data analysis will take place at UNHQ. The Steering Committee reviews and approves the findings approx. 1-2 months after completion of survey The 1st interim survey is initiated 11 months after the comprehensive survey.

39. Comprehensive salary survey Preparation phase Data collection phase Data analysis phase Salary scale construction phase

40. Preparation Phase Responsibilities of the LSSC

41. The preparation phase Selection of potential comparators Post inventory Current information on tax laws and regulations Tax rates Exemptions/Deductions Credits/Rebates/Allowances Taxability of benefits Sample tax calculation Information on Social security Country-wide common rates Submission to Responsible agency

42. The Local Salary Survey Committee (LSSC) Ideally equal number of staff and admin reps Chaired by a senior official of designated agency, must be internationally recruited Maximum 12 members Time commitment: release from regular duties Can have subcommittees Emphasizes confidentiality

43. Confidentiality Written confidentiality pledge of members: “… I pledge to respect and preserve the confidentiality of employer-specific survey-related data obtained as a result of my participation in the survey… “… I further understand that a breach of confidentiality, such as by divulging any employer-specific survey-related data, including judgmental statements pertaining to such data, to a party outside the secretariat of ICSC, the Local Salary Survey Committee and data collectors can lead to a major disruption of the current, as well as future surveys and should be considered as sufficient reason for my replacement in the survey process and, additionally, may render me liable to face appropriate disciplinary procedures by my organization… “

44. Documents to review by the LSSC The ICSC Salary Survey Methodology (ICSC/72/R.11) The Salary Survey Manual (on OHRM website):http://www.un.org/depts/OHRM/salary_survey/resource_centre.htm

45. Sources for Identification of Potential Comparators Local Chamber of Commerce Trade and Industry Association Leading Employers Previously surveyed Comparators Headquarters information on multinational employers found to be highly competitive Personal networking Internet, professional recruiters etc..

46. Key Criteria for Comparator Selection Broad cross-section of competitive economic sectors (including public service or parastatal institutions) Established in the locality for approx. 5 years. Employees engaged in office work: 15,10 or 7 comparator retention duty stations: at least 50 employees 5 comparator retention duty stations: at least 20 employees Must be within commuting distance of duty station

47. Key Criteria for Comparator Selection Retention of majority of employers from the previous survey Exclusion of employers setting salaries based on UN salaries only.

48. Criteria for Distribution of Comparators by Economic Sectors Public Sector:Min of 25% of comparators retained when National Civil Service included; 33% when not included Private Sector:Maximum of 25% of employers from the same sub-sector

49. Global Comparators International Organizations:embassies (e.g. US, UK, Canada, The Netherlands), EU, World Bank, EBRD Banking Sector:HSBC, Citibank IT Sector:IBM Oil Sector:ExxonMobil, Shell, BP

50. Contacting Comparators Send initial letter with information on UN survey process (included in package sent by OHRM) Contact more than required number for employer retention and establish a reserve list of employers Assess whether employer should be included in the list of employers to be surveyed. Explain to employers the type of information that will be required – job matching, copies of salary scales, specific details on other conditions of employment – allowances,bonuses, loans below market interest rates