2008 employee salary program application … as us esp department meeting module.pdf2008 employee...

| June 2008 © 2008 IBM Corporation

2008 Employee Salary Program Application Services US

Employee Briefing

2 ©2008 IBM Corporation

2008 Employee Salary Program

Purpose of Today’s Session

Discuss the current GBS business climate and drivers

Provide overview of key components of the 2008 employee salary program

Discuss AS specific Employee Salary Program

Overview on promotions

Review key dates and resources



GBS Business Climate and Drivers

Recent, consecutive quarters of strong performance are a level of performance expected by IBM, the market and our shareholdersThe services business continues to be extremely competitive, requiring prudent investment decisionsWe are essentially a labor based business and labor costs represent our largest expense…talent is becoming a competitive advantage, making balanced, thoughtful investment decisions keyExecution of GBS’ 3-D strategy is critical to our success

–

The Delivered Globally component is evolving to an integrated delivery model with continued focus on sourcing the right skill at the right cost

–

Focus on differentiating your skills and deepening your client relationships



IBM Compensation Strategy

Differentiate strongly

Pay for performance

Pay competitively

Rewards based on business and individual performance

Investments focused on paying the “best like the best”

Markets for jobs drive pay rates

Focus on competitive pay levels over time

Results/outcomes drive differences



Background: Annual Salary Investment Decisions

+Balance of:

Business performance

Affordability

Competitiveness

Primary Considerations Other Factors

Projected market movement

Voluntary attrition rates

Industry trends

Other annual investments

Senior business leaders: Business unit, country, IOT and CHQ

Decision Makers



Background: IBM’s Analysis of Market Pay and PracticeSurvey Participation

Participate in 100+ major benchmarking surveys globally, conducted by third-party consultants, for all major job families

Ensure rigorous process for job matching to comparable jobs at other companies; approximately 80% of employees are covered by job matching

Concerted effort to obtain survey data that includes all key competitors for business and for labor; list reviewed annually with senior line management

Trusted Survey Sources

Reliable surveys ensure quality control in compensation data collection and analysis, and safeguard data

Confidence in survey data is established and fostered by surveys maintaining continuity over time

Surveys offer robust job descriptions and responsibility criteria for companies to use in matching comparable jobs

Data Not Considered Reliable

Internet or other open surveys generally match jobs by title alone and do not ensure quality control or continuity in their participation

Research studies/reports where data collected lacks the rigor and process of trusted survey sources



Overview of the employee salary program

Market-Based Adjustment Top Contributor Reward

Designed to support and achieve pay competitiveness over time

Designed to support pay for performance

Those in high-demand countries and job families; may differ each year by country/job

family

Employees with a PBC 2 or higher, with base salary below market for their job family

Top-performing employees (PBC 1 and 2+) in all countries and job families

Based on relative contribution

Determined company-wide; some manager differentiation

Managers, through team-based decision-

making

Why

Who

Who decides



PBC Below Market Reference Point At or above Market Reference Point

1 Market-Based Adjustment and Top Contributor Reward Top Contributor Reward only

2+ Market-Based Adjustment and Top Contributor Reward Top Contributor Reward only

2 Market-Based Adjustment only Not eligible for Market-Based Adjustment and Top Contributor Reward

3 & 4 Not eligible for Market-Based Adjustment and Top Contributor Reward

Not eligible for Market-Based Adjustment and Top Contributor Reward

Eligibility for Market-Based Adjustments and Top Contributor Rewards*

* Not all countries, units and/or job families will receive MBA/TCR funding each year.



+10% *

Geographic Pay DifferentialsMarket data supports differentiating pay by region

IBM exempt population (i.e., generally bands 6 - 10) has become more geographically diversified and geographic pay differences are commonplace in the marketSurveys of competitors show wide acceptance of separate pay zones for exempt employees

Accenture, Dell, EDS, HP, Intel, Microsoft, Sun, Texas Instruments and others have differentials for their exempt population

Three geographic zones of payAll job families within a location/city will be assigned to the same zone (based on the CERIS Work Location Code)

Every location with an IBM population has been assigned to a zoneAnnual reviews are conducted to assess location assignments to a zone

Benefits of geographic pay zonesImproves employee competitive positioningHelps ensure we are not overpaying or underpaying employees

* Represents the differential at the market minimum, midpoint, and maximum from the national average

-10% *Premium

e.g., Silicon Valley, New York City, Westchester County, Northern New Jersey

15% +/- of employees

National

e.g., Boulder, Cambridge, Chicago, Dallas, Philadelphia, Poughkeepsie


Regional

e.g., Atlanta, Austin, Burlington, Endicott, Raleigh, Rochester




Promotions within GBS US will be planned for in cycle with an effective date of June 1.

To be eligible for promotion, employees must be at the appropriate PDF and certification levels. Promotion to Band 10 requires VP approval.

Employees being promoted must be given increased job responsibilities/role to demonstrate increased scope, skill level and responsibility commensurate of an increased band level/promotion.

Affordability within business units is a consideration factor which is necessary to remain competitive.

IBM is committed to EO and Diversity throughout promotion consideration process.

Promotions



Sample Notification Statement

MBA/TCR percent

New salary



Sample Notification Statement – Incentive

Incentive Information



Key Dates – U.S.

Activity Dates

Managers communicate salary decisions to employees June 17 -

26

MBA/TCR effective date June 1

MBA/TCR

reflected in pay statement June 30



Resources to Help

You and IBM –Your Salary - Your Money Web site(http://w3.ibm.com/hr/hrinfo/totalrew.nsf/0/9b358408ec336aba85256b48007

04750?OpenDocument)

Employee Service Center1-800-796-9876 or IBM Compensation/Raleigh/IBM

–General policy

Your Manager

http://w3.ibm.com/hr/hrinfo/totalrew.nsf/0/9b358408ec336aba85256b4800704750?OpenDocument

http://w3.ibm.com/hr/hrinfo/totalrew.nsf/0/9b358408ec336aba85256b4800704750?OpenDocument



Appendix



Frequently Used Terms

MBA – Market-Based Adjustment, an adjustment for eligible employees in eligible countries, units and job families who are below the MRP

TCR – Top Contributor Reward, an increase for eligible top contributor employees to recognize pay for performance

MRP – Market Reference Point, otherwise known as competitive pay point or 100% PMR. The MRP is the mid-point for the market for a particular job based on competitive information by industry and country

PMR – Percent to Market Reference, 100% PMR is a synonym for MRP or competitive pay point or market mid-point. To calculate PMR divide current monthly reference salary by the market reference point multiplied by 100. For example: if the Market Midpoint is $45,000 and the employee's Reference Salary is $50,000: $50,000 / $45,000 * 100 = 111. Therefore, the employee is at 111% of the market range

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