IRP II Q&A

1. What is IRP II?

The International Remuneration Project II (IRP II) is the name given to the project launched in August 2010 to review existing international staff terms and conditions (i.e. pay system, benefits, contracts set up, etc.) implemented in 2006 as a result of what was known at the time as the “IRP”.

2. Why IRP II?

The International Remuneration Project (IRP) is the name of a project that originated from an idea born late in 1999. The idea was to formulate an answer to – at the time present - issues of inequity in compensation, lack of social protection for a large group of expats and inexplicable differences in standards between sections, which, separately or in combination, were hampering the retention of staff.

Reward is a much debated subject in MSF. In labour markets around us, it is generally considered as mutual exchange of reward for time, effort and competence that a person can bring to an organisation. In an organisation such as MSF this exchange which seems inherent to reward, also relies on the intrinsic motivation of staff. People come to MSF to act upon a humanitarian impulse;

MSF basically enables this by removing barriers for people to do so.

After the implementation in 2006 of IRP I, it was already anticipated that the system should be reviewed and updated after 5 years. When the time came, it was obvious the organisation had changed significantly in size and complexity in the previous decade, and questions were raised as to whether the approach of ‘removing barriers’ for volunteers to enable them to work for MSF was (and would be) still valid for MSF. Do these barriers still exist in a globalised economy? If so, do economic factors have more weight in these barriers and can we afford to further lower them knowing our current financial constraints? And lastly, how can we lower them, for which groups of staff and why?

Simply put, the rationale for starting IRP II was to answer these questions. Initially it was meant as a “simple” update to adapt the compensation & benefit package to new realities and provide answers to known issues. However, as the project progressed, it became clear that MSF needed to take a fresh look at our total reward system and the principles underpinning it if we wanted that the new system also support MSF’s operational ambitions and challenges in the mid to long term.

3. What are the main challenges right now with regards to our compensation and benefits package?

There are several challenges that IRP II -, the new compensation &benefits package-, is meant to address. First, the complexity of our operations: we not only have more projects, but they are more complex and need to be staffed with more specialists (medical in particular) and coordinators with improved management skills (because size of projects has considerably increased in terms of teams, budget…). We need to attract, retain and motivate them.

Secondly, we need to move away from the current reactive HR response to support our operations, in favour of a more pro-active model which will provide more visibility and predictability of deployment of our international staff, and also facilitate development & career opportunities (which will eventually be translated in a higher quality and better management of our projects).

Last but not least, we need to facilitate committed international staff to stay longer in our organisation to provide stability in our missions and benefit from their know-how.

4. What is the strategy the IRP II system is intended to support?

IRP II is intended to more effectively support MSF’s need to attract, retain and develop a highly skilled, highly reactive, internationally mobile workforce, engaged in short to mid-term intense, emergency, humanitarian medical care operations, often in very difficult living conditions, whilst at the same time adhering to the association’s global primary values of engagement, humanitarian volunteerism and motivation, fair treatment and responsible employership.

But in addition, it is also intended to support the fact that MSF would like to better retain certain competences for prolonged periods which may require us to further lower barriers (i.e. improve pay and/or packages) to enable expats to commit for longer periods.

5. What are the guiding Reward Principles in IRP II? Have they changed compared to IRP I?

The reviewed reward principles have not changed from those defined in IRP I. Rather, they have been clarified and expanded. The core principles are: modesty of pay, equity, coherence across segments of the population and being a responsible employer.

We will continue to promote a spirit of volunteerism and humanitarian motivation in all our staff. In practice, this means that pay can never be the dominant motivator in working with our organisation.

However, we also have added the concept of “mutuality” to acknowledge the sociological reality of the labour markets we function in and are a part of, and because we want our rewards to be related to (and potentially vary based on) what a person brings to the organisation.

6. Why equity and not equality? Why make a difference in pay between people doing the same job?

To begin with, equity and equality are two concepts that should not be put in direct opposition.

Equality is about same quantity, whereas equity is more qualitative, it is about “equivalency”. Equity in fact strives for equality, but rather than just treating everyone the same to achieve it, it starts with defining what is fair and just in terms of treatment and then strives to apply this consistently.

It is recognised that equity as a concept poses some practical concerns when defining pay on a global scale. However, it is important to understand that equality poses other practical concerns as well.

Considering that our total reward policy is in principle aimed at removing financial barriers for people to engage in humanitarian action, equal pay will raise questions about how unequal these barriers in fact are. Especially considering that most economic barriers are those imposed by the societies in which people reside.

To squirt this issue of equal barriers, we could benchmark in the highest-income country we recruit from. Assuming a continuation of current operational volume, not only is this unaffordable for MSF, but it is also sure to raise questions in terms of identity, image etc. in many countries. Especially in those where we fundraise and are therefore accountable in, if we offer expats a salary higher than what they could earn in their own market. Indeed differences even among developed countries can be significant.

In the current pay system (IRP I), where we pay only on local market but limited/compressed the maximum difference, there is already nearly a 50% difference between highest and lowest paid section. In some cases this will result, even with our modest rates of pay, in pay levels higher than the local labour market. For that matter, the question should also be considered, both in term of resulting different market positioning and identity/image for all countries from which we recruit expats.

But in fact, equity is not so much the issue at stake. The debate rather revolves around what it is referenced to: should we be seeking to be fair and just in reference to home based pay? Or should we look at host based pay, or a global/single pay system? All these options have been looked into during the IRP II process, and none proved sufficient in itself to address MSF’s needs, concerns and principles. In the end the proposed system is a combination – or “hybrid” model.

7. What is the practical translation of the equity principle?

IRP I built salary structures based on equity referenced to “home country” for the vast majority of our international population residing in countries where MSF has a contracting section. At the time, due to the size and scope of the changes already involved in IRP I, it was decided to move on to staff residing in countries with no MSF contracting structures in a later stage. These are the so-called “Non Contracting Country Residents” (NCR) who today represent 29% of our international population (barely 10% at the time of IRP I). NCRs do not only include low income country residents. Fins, Russians, for example, are part of this group as there is no MSF contracting entity in their countries.

IRP II system applies the same principles to all staff. This includes the home-based component of pay, applied consistently across all populations. However, it was concluded that a fully home-based approach did not address the issue of the value we give to the responsibilities people take, which should be equal for the same job.

As a result, we built a hybrid pay model. Salary is constituted of two parts, one part based on a home-country based salary benchmark and the second part based on a global INGO salary benchmark. These two reflect both the cost-of-living/market reality, but – for a larger part of the sum at the higher levels of responsibility– the value we give to jobs. As a result, the higher the job in the hierarchy, the more equal the pay between nationalities. So that the difference in pay between a Swiss resident Head of Mission and a Congolese resident Head of Mission will be proportionally less than a Swiss resident hands-on nurse and a Congolese resident hands-on nurse.

8. Why does IRP II compensate international staff (in part) based on their country of residence rather than their humanitarian work and values?

We already cover the needs of international staff equally in the field in terms of food and accommodation through the system of Per Diem and other field benefits (also harmonised between OCs as part of IRP II). So part of the salary is therefore designed to support the expatriate with their home expenses. The model that has been used to build salary grids in IRP II ensures a balance between local and global pay (the so called hybrid model explained above). It is a good compromise between equity and the link with home societies and markets, equality of pay for same responsibilities, as well as the reference to the global international NGO market.

9. Why not create one salary grid for all; those that are hired locally, those that are hired internationally from stable high income countries and those that are hired internationally from low income countries?

This would ignore one of the main differences we value in our international staff: their mobility and their willingness to be deployed internationally based on the needs of the organisation.

Moreover, our current international labour model is based on primarily short term assignments, with high turnover of very mobile staff focused on performing their work in intense situations where there is often little opportunity for economic connection with host societies. This also supports the idea of relating pay to home cost of living. The current model is not likely to change in the near future, even in the mid to long term. However, if it did change, and MSF was able to rely more significantly on longer-term assignments, then switching to a primarily on host country based related cost of living/rate of pay should be considered. Having said that, it is also true that expatriate consumption patterns, needs and habits are not the same as local ones.

10. What is the current situation with “Non Contracting Country Residents” (NCR)? How are they paid in IRP I?

Today, because NCR were excluded from the scope of IRP I (due to its already extensive scope and complexity), and no system developed to link pay to home-base for these countries, a Russian resident, since there is no MSF contracting section in his country, working for OCP will get a French contract from MSF France and a French based gross salary or indemnity. The same Russian expat working for OCG, will get a Swiss contract and a Swiss based gross salary. In other words, his indemnity or salary not only is not linked to the cost of living in his country of residence (as is the case for the rest of the International staff resident in one MSF section country), but it varies depending on cost of living of the operational sections he works for. This can result in competition between OCs, and creates inequity amongst expats.

11. How “far” has the equity principle been applied to define pay for these Non Contracting Country Residents in IRP II?

Whilst continuing with the home-country based pay, there were quite some concerns that expanding this principle to the very low income countries, the pay drop would be substantial; maybe not for staff currently under contract due to contractual guarantees, but at least for new hires. It is very difficult to counter-argue this point, knowing that it is impossible to compare our staff’s socioeconomic situations in a holistic manner. It should therefore not be our ambition to have this knowledge. So to prevent a potential lack of understanding of the markets, it was decided to apply a lower limit to the home-country based survey results, i.e. a minimum starting salary.

The minimum starting salary represents an MSF threshold. No starting salary can be below the minimum one, which is fixed by MSF following a methodology to ensure internal consistency. For example, a hands-on nurse with no management responsibilities would be in the lowest salary category in the international staff grid. If, according to the salary index for his/her country of residence, this salary falls below MSF’s acceptable standard, he/she would receive the generic minimum starting salary. In other words, all hands-on nurses coming from countries where the individual country salary indices would put their salary below the acceptable figure will have the same “MSF” starting salary, with no direct link to the cost of living in their countries of residence.

12. Is the indemnity the practical translation of the volunteerism spirit?

The indemnity period is one of the practical translations of the principle of volunteerism. It is how MSF chooses to ask our expatriates to show their commitment to MSF’s principles of volunteerism. It is a standard for the organisation. We pay indemnities to first missions during that period to enable them to volunteer by providing some financial support, but we only compensate for certain costs, rather provide compensation for work done.

In February 2013, the International Board reaffirmed the principle of volunteerism and its translation into our reward system though an indemnity period and asked the Executive to maintain the current application of indemnity, i.e. a twelve month duration and implementation as is.

13. When is IRP II going to come into effect?

The new compensation and benefits system developed through IRP II is planned to be implemented Jan 1, 2014 in all entities providing contracts to international staff. The preparation (implementation phase) will last from the expected final validation (April 2013) to December 2013.

By: Association Intern