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Mercer’s Compensation Management Index (CMI)

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Mercer’s Compensation Management Index (CMI)

Last updated: 27 May 2009

 

The CMI has been developed to help organisations make a quick analysis of the effectiveness of their compensation management capability in these unprecedented times.

What is compensation management?

‘Compensation’ refers to base pay and variable pay programmes. These need to align within a context of total rewards but in this instance it refers to the cash components of rewards. ‘Compensation management’ refers to the structures, resources and processes that organisations need to manage the major investment they make in compensation.
 
Organisations who manage compensation effectively distribute the paybill more fairly (saving money and reducing the risks associated with poor allocation), report better employee satisfaction with pay (and job satisfaction as well as commitment to the company), experience improved attraction and retention rates and have lower function operating costs.
 
Effectiveness is a relative measure of the extent to which delivery matches the importance of the capability. Over- and under-delivery suggest the need for change, to refine the capability for maximum effectiveness.

What do I need to do? 

The index takes five to ten minutes to complete. It is based on 22 statements, which you rate based on:

  

a) your current delivery i.e. the extent to which you agree with them and 
b)

the importance they have for your organisation.

 

 

These statements evaluate six factors associated with compensation management: 

  

  • Strategy – your ability to review your talent needs, adapt your compensation policies and control the way these policies are applied.
  • Organisation – the extent to which the compensation management responsibilities are defined, agreed, resourced and structured.  
  • Design – the extent to which your base pay and variable pay programmes are aligned to your talent needs and deliver the value required.
  • Process – your access to market data and your ability to derive the insights you need to manage compensation. 
  • Technology – the extent to which your technology supports your needs to plan/model compensation and facilitate manager decision-making.
  • Communications – the extent to which you influence a) managers abilities to deliver fair compensation decisions and b) employee perceptions of the compensation levels.  

What will I get?  

The CMI immediately calculates your raw scores for each of these factors and charts these along the two dimensions (delivery and importance). Each factor is given an index (the ratio between these two dimensions) and produces a single measure of the effectiveness of the compensation model (see example output below). You will receive an instant PDF report with your results and explanatory notes in an email.

 

 

Compensation Management Index

 

 

In addition we are collecting further information about your organisation. Why? This will be used to develop benchmark data and help us develop further insights into effective compensation management. We anticipate releasing further analysis and points of view of this topic and will provide these free to all those who participate in this research. Please be assured that your submission will be treated in strictest confidence. Although we may name your company as a participant in any reports we will not reveal your responses or scores.
 
Launch the online index   

 

If you want further information on Mercer's Compensation Management Index, do not hesitate to contact davi...@mercer.com or priy...@mercer.com.

 

2009 EMEA Compensation Management survey image