Johnson and Johnson’s newly implemented global compensation strategy is allowing it to develop single career models across its businesses, improve succession planning, integrate newly acquired companies more easily, and present a more uniform face at graduate recruitment fairs.
The rollout of the global strategy to its 250 businesses across 70 countries entered the planning phase in 2007 and was completed in spring 2010, although work still continues.
The multinational company wanted a standardised global approach to compensation, which would increase eligibility and opportunities to move talent internationally. It also wanted to improve its alignment with local market practices.
Speaking at WorldatWork’s Total Rewards 2011 conference in San Diego in May, Dave Berwick, compensation director at Johnson and Johnson, said: “Our end goal was to create a more consistent employee experience throughout their career at Johnson and Johnson.”
The US-headquartered multinational employs more than 115,000 staff in three divisions: pharmaceutical, consumer and medical devices.
It used Mercer’s international position evaluation (IPE) tool to establish job frameworks, but with varying levels of rigour at different levels. Therefore, global compensation and executive teams were responsible for mapping job evaluations for its 500 top executives, with local HR and regional compensation teams mapping jobs for 22,000 managers and 98,000 other staff. Berwick added: “The fundamental compensation strategy is not changing, but how we get there is changing significantly.”
Keren Maldonado, regional director total rewards Latin America at Johnson and Johnson, who was based in Europe during the project, said each business leader had autonomy on how to organise their own company. “So this presented us with a challenge,” she said.
Also, Johnson and Johnson’s three divisions are very different. For instance, a sales representative in the consumer sector is very different from one in the pharmaceutical sector. “What may seem a very similar job can be very different when you look into it,” said Maldonado.
The exercise showed that 5% of the group’s staff were below the correct pay range for their job role. Berwick said: “We did not decrease anyone’s pay. We gave businesses two years to move everyone into the pay range.”
Johnson and Johnson designed its overall strategy centrally in the US because there were differing levels of compensation expertise locally. However, it had expertise based around the world, with meaningful local representation on project teams to improve its ability to understand regional complexities and craft appropriate solutions.
For example, businesses in Venezuela and Argentina require frequent salary reviews to keep up with hyper-inflation, while those in China and Indonesia are less transparent about salary levels because of national sensitivities.
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