That was exactly the dilemma Bayer Corp. faced when it merged three businesses into one, five years ago. It had three separate ways of evaluating people and jobs among the three companies, and it quickly needed to align the three into one consistent process. What resulted was a revamped job-evaluation system that encapsulates the firm's new vision, mission and goals. The new way of valuing work was designed to align with the competencies required for successful performance in an emerging new culture.
A new corporate identity leads to reevaluating roles.
On January 1, 1992, what used to be known as three separate operating companies-Mobay Chemical Corp. (a chemical producer), Miles Inc. (a health-care organization) and Agfa (an imaging company) -- merged together as one organization with three divisions now known as Bayer Corp., the largest subsidiary of the Bayer Group AG, based in Leverkusen, Germany. With a new identity and a desire to capture the lead in the global marketplace, Bayer's senior managers realized they needed to create a deeper identity for the Pittsburgh-based organization.
To achieve the firm's new goals, Bayer's senior-executive team thought it best to start at the beginning by developing a common vision and a new set of values to help bond these far-flung operations and diverse workforces together. Next, Bayer senior managers flattened management structures, so the firm could become more responsive to changing markets, and updated how they defined and processed work in the new organization. In addition, the company needed people in roles that move laterally across functional and international boundaries. Employees in this new organization had to be fast and flexible in diverse environments that often are characterized by uncertainty and risk. Bayer's leaders knew early on that if they wanted to get employees focused on new values such as customer loyalty, quality and productivity, those values would have to be reflected in the processes the company used to assess each job's expected and actual contribution to the organization.
Senior managers set out to make the message clear: Whether one's a chemist, an engineer, a manufacturing technician or a salesperson, the key to a successful career at Bayer is to embrace the company's new values. To drive this message home, the company began to change the way it defines-and eventually compensates -- the role each individual plays in the organization.
Valuing work in a new way.
Bayer's managers recognized that although jobs are static, roles change according to the task at hand. They wanted to measure and reward the specific, yet highly variable talents people need to succeed in these roles. Because leaders in the new organization were interested in valuing flexible, team-oriented behavior, the job-evaluation system needed to explicitly recognize those qualities.
"What we were trying to do was figure out how to keep the job-evaluation methodology and process simple, building on what was working before but making the appropriate changes to reflect the new organization values," says James Bowers, vice president and managing director of The Hay Group, a worldwide HR management consulting firm based in Philadelphia that had been consulting with Bayer on job-evaluation systems and other HR management topics such as competencies for some time.
The transition to a new compensation process was a challenge that one specific group at Bayer took ownership of -- and led from the beginning.
A task force evaluates the old system.
According to Bowers, the biggest business challenge in revamping the job-evaluation system was laid down by Helge Wehmeier, Bayer Corp.'s CEO. He said, "Whatever you do, I want the work-valuing process you come up with to be responsive to what we're doing as a business, and I don't want it to increase costs." It was a big challenge, but one managers had to face not only to move the company toward its new goals, but also to help shape the company's future direction and success.
With the CEO's mandate in mind, company executives assembled an executive task force which they called the Job Advisory Committee made up of Bayer Corp.'s 14 senior vice presidents in September 1994. John Schulz, Bayer's vice president of benefits, compensation, EEO, HRIS, International and Policies, chaired the group's activities. It was the task of these executives, over the next 18 months, to understand the Bayer culture and its link with job evaluation, and then to revamp the system as needed.
Previous to the three companies merging, both Agfa and Miles had used what's known as the Hay Guide Chart-Profile Method -- a point-based, job-evaluation system -- as their job-evaluation methodology. Miles had used this chart-profile method since 1971, and Agfa had used it since the late '80s. It was also the system on which the two companies had based their benchmarks for compensation decisions. However, the third company that had joined with Agfa and Miles -- Mobay -- had never used an empirical job-evaluation system; its method for assessing the value of jobs was much less formal. The goal was to get all three companies operating on the same system, one that was aligned with the "vision, values and beliefs" of Bayer Corp. This goal was set so that managers, supervisors and employees could count on fairness in job value assessment and so that employees could move from one unit to another without having to get used to a new system each time. "Miles and Agfa had used this [system] for years, but there was a growing feeling that what they were doing wasn't necessarily aligned with the direction the organization was going culturally and strategically," Bowers says.
As a consultant and partner, Bowers was involved in the executive task-force meetings from the beginning. "There were a lot of opinions about what the issues were, but less clarity about what to do about them," says Bowers. He suggested the group decide what was working with the current job-evaluation methodology and processes, what wasn't working and how to bring the system in line with the company's new goals. The first step was to conduct a diagnostic on the company's work culture. Because one of Bayer's key competencies as an organization is research, this approach was readily embraced and produced consensus views on past, current and desired future culture.
Moving from a hierarchical culture to a process culture.
What the diagnostic testing discovered was that the old job-appraisal system wasn't that bad in terms of evaluating jobs and work, but there were some key aspects that needed to change. "[The newly created company was] about two years old when this project happened, and there was still a sense that certain things were being done the way the chemicals group [had done them] and some things [were being done] the way the health-care division [had done them]," explains Bill Sproule, a member of Bayer's central compensation group, who was also involved in the project.
The task force decided that on average, the old system was working 80 percent of the time. It decided to zero in on the 20 percent that wasn't working so well. "It seemed like the issues were more in perception and methodology than in process. [Those who rated the old system] actually liked the committee job-evaluation process," says Bowers. "They liked the participatory, cross-functional aspects of the process. But there were concerns that the methodology (the job-evaluation factors and definitions) was too oriented toward functional and hierarchical values, which is what [Bayer managers] were trying to move away from."
Bayer's leadership was de-emphasizing functional culture values (characterized by an emphasis on jobs rather than on roles) and instituting a strong trend toward increasing process-culture values, time-based values, customer-based values and network values. (See the end of this article for information on obtaining further clarification on what these terms mean.) Clearly, it was time to tackle what wasn't working.
Fixing the 20 percent that wasn't working.
"What we were trying to do was dramatically improve the methodology and process while not disrupting the 80 percent of what the company was doing that was perceived to be working," says Bowers. A majority of jobs were properly graded. For the 20 percent that was perceived as not working, there were some valid issues and misperceptions. For example, some employees and managers thought their old evaluation process recognized and rewarded people for having degrees and credentials as opposed to how those degrees and credentials were applied to jobs. This thinking was a misperception because there was nothing in the old system that actually valued degrees or credentials per se.
Another problem was the misperception that jobs with substantial employee or budgetary responsibility got more credit than those that didn't. Although this was the perception, there was nothing in the evaluation process that said if you have a certain number of people under your supervision you get this many points. But that misperception was widely held within the Bayer culture, and it was clearly viewed as an inappropriate measure that focused on inputs more than outputs.
Still another misperception was that an employee couldn't get closer than two pay grades to the person to whom he or she reported. "That was a hierarchical value and not one that recognized the value of roles," says Bowers.
The task at hand was how to address the misperceptions that existed, and still account for all the new positions and responsibilities throughout the new organization that had been created through reengineering and downsizing.
The task force decided it could do one of four things:
- Keep the current job-evaluation methodology but change the definitions to be more culturally appropriate, and do a better job of communicating its overall strengths.
- Redesign the factors and definitions of the factors, building more of the future values into the current system (based on the company's mission, values and belief statements), but maintain the existing work-valuing architecture (how points map into existing grades).
- Start clean and design a new work-measurement system with different factors, weights and metrics that wouldn't necessarily integrate into existing grades.
- Develop a new pay-delivery mechanism, employing concepts such as broadbanding and pay-for-competencies.
After evaluating the options, the team decided on the second approach, redesign. In fact, after extensive review and analysis, the task force concluded that most jobs were properly graded and paid under the current methodology. The challenge was to build a bridge between proven time-tested values and future goals.
Bayer's task force decided that a more contemporary Hay Guide Chart-Profile Method was the best tool to ensure a consistent approach to work valuing across a wide range of positions. But now the charts would need to do more. To reflect the need for flexibility in the way the firm defines work, Bayer wanted to explicitly recognize a wider range of values. The team knew the words in the charts would have to help send the message that what people create is more important than what they "own," and that the important jobs aren't always those that appear impressive. The roles people play to help Bayer achieve its objectives -- as summarized in its vision statement -- had to become the key determiners of value. Competency concepts were required to align with strategic goals and performance-management processes.
After the initial work-value methodology redesign effort, which reflected new values and competencies, the company's compensation team embarked on an evaluation of a core set of 175 jobs it had evaluated once before during a benchmarking study with Hay. "We had a benchmark between how we had previously evaluated jobs and how these same jobs were evaluated using the new methodology. We compared the differences so we could see the effects of the test and what kind of jobs were affected," says Schulz.
The company went through three rounds of testing on the system. Bayer's internal compensation group tested it first. In this first pass, Bayer found it had raised the bar too high. This resulted in downgrades for a number of jobs. As a result, the factor definitions were toned down a bit. In the second round of testing with cross-divisional HR generalists, the fine-tuned methodology worked better. Then the company further fine-tuned the methodology on the third pass, after it went through testing by the executive task force/job-evaluation group.
Says Bowers: "It was the calibration that was the major challenge to make sure that it represented an increase in performance expectations to get to a certain grade, while not resulting in wholesale downgrades. But one of the ways the task-force members dealt with it is they said, 'We're not going to go back and reevaluate all the jobs. We're going to map them to the pre-existing system and assume that those evaluations are correct unless somebody brings up a job for reevaluation because he or she thinks the job was inappropriately graded under the old system.'"
The task force decided not to change the jobs that hadn't changed during the reengineering efforts but changed the evaluation process for the jobs that had changed, such as team leader, order-fulfillment clerk and supply-chain manager -- positions that represented new work processes in the organization that hadn't existed in quite the same way before the company reconfigured.
It was interesting that the first tests showed the task force had set the bar so high that some of the jobs couldn't measure up to their old grades. Descriptions of job factors incorporated expectations that were beyond pre-existing standards. For example, a job that required a strong sense of achievement or commitment to customer-service satisfaction or that required leading change processes, might not measure up to the same level under the new system. "So what we ended up doing was softening some of those factors, essentially lowering the bar so that it didn't cause a massive downgrading in jobs, because we got maybe a little too aggressive during the first pass," says Bowers. The company couldn't afford to change the rules so drastically that employees would be viewed as competent today and then incompetent tomorrow. Yet, it clearly needed to push employees toward achieving the company's new goals and values.
Setting criteria for the new system.
Change couldn't come at the expense of those important aspects of the work-value methodology that needed to be preserved. Above all, the system would have to remain fair and unbiased-based on objective, measurable criteria. Like its predecessor, the new tool had to be easy to explain and legally defensible. Finally, it had to continue to add value, empowering line managers to define the expected contribution of each role to the enterprise.
The task force determined the new system would have to meet the following criteria:
- Be compatible with Bayer Corp.'s vision, values and beliefs.
- Decrease the emphasis on hierarchy, head counts and budgets.
- Value individual capability requirements.
- Reflect team contribution.
- Be flexible in recognizing differences in culture across businesses.
- Be clearly perceived as responsive to today's reality of how work is accomplished.
- Increase emphasis on customer service, teamwork, performance improvement, mpowered work processes and the changing work environment.
- Enhance the positive aspects of the current method.
- Retain enough compatibility with the current method so a complete reevaluation of jobs companywide wouldn't be necessary.
- Add value and links between work contribution and company success without additional cost to Bayer (no wholesale upgrading of jobs).
Without a common vision, reaching consensus on a new work-valuing method may have proved impossible because of the differences in jobs among the companies. Manufacturing people might think job-evaluation plans overemphasize academic credentials and depth vs. breadth of knowledge such as cross-functional experience. On the other hand, researchers who typically have lower budgets and smaller staffs, might criticize a method for being too "bucks and bodies" oriented. By turning the focus away from these functional values and toward dimensions more reflective of Bayer's vision and values, the task force realized two benefits: quicker consensus among people with differing perspectives and a reduced emphasis on traditional job-related factors, especially those aligned with hierarchical values. The new method would place more emphasis on expected behaviors and outcomes instead of inputs and credentials.
Key lessons learned.
Bayer's senior managers learned early on that organizational change must be accomplished through people. Leaders have to consistently and frequently send the right messages and reinforce the right behaviors if they're going to achieve the desired results. Attaining this outcome requires that people understand the current values and culture and that leaders clearly define what the new expectations will be. As a business tool, work-value measurement brings these expectations into sharper focus.
Perhaps the best indication that Bayer has moved in the right direction is the unanimous support from stakeholders -- namely, the people who use the system. "We actually have one pay system throughout Bayer now, and the job-evaluation system is fundamentally level across the organization," says Schulz. "We're all using the same yardstick, if you will, to measure the size of jobs that meet the [needs of the] modern-day organization."
But the success of the revised system wouldn't have been possible without the early buy-in and participation of Bayer's senior staff. "What's important about the process is involvement [from everyone]," says Schulz. "The HR people don't own job evaluation. Our line managers own it-and they own it in teams in their own sites and in their own divisions -- so we don't have great arguments internally about job levels and relationships because our own line managers resolve these issues."
From the redesign process, Bayer managers learned they couldn't just take a canned approach -- a job-appraisal process from a consultant -- without tweaking it in a way that made sense for their organization. These days, companies need to have a balance between using internal and external information to design their human resources tools-they can't be designed without some outside input, but neither can new systems be installed in a vacuum. It must be a process of evaluating company needs against the benchmark of the business community at large. "The question these days is, 'What do you lead with?'" says Bowers. Do you lead with more of an internal view of what a job's worth to the company and then validate that with external references, or do you lead with external references and then make a holistic judgment to modify the job level based on internal factors? "I think every company should have a balanced approach, which considers work value from both an internal and external perspective," says Bowers.
In the end, achieving a balance between people and jobs and between a company and its goals is always a challenging feat. The trick is to try to nail it down with the right tools that make sense for the organization in a global business environment.
Workforce, May 1997, Vol. 76, No. 5, pp. 38-49.