How to Build A Competitive Pay Structure with Compensation Survey Data

TalentTakeawayswebinar & podcast series

How to Build aCompetitive Pay Structure withCompensation Survey Data

AGENDAThe Series


Talent Takeaways Series | Compensation

AGENDAThe Sponsor


AGENDA

Brian SharpChief Marketing Officer

Mark AveryCEO

Our Presenters


Overview

Most large organizations purchase and use a number of compensation surveys to keep their pay programs in line with the market

Salary range (structure) development is performed annually to ensure that a company’s pay range for a given job is market-competitive

Traditional methods

New technology-enabled capabilities


Advantages of market based compensation

Easy to explain and understandPoint-factor and other job evaluation approaches confuse and frustrate line mgrs

Competitive necessityIn an increasingly global economy, there is much more pressure to manage and

control costsLabor is often viewed like any other resource – organizations want to pay the

“right” price for the level of quality they desire

Reduce administrative burdens

Puts the Comp/HR person on more solid ground in pay discussions


Market data used for all types of structures

Establishingcompetitivepay ranges

Grade Structuremidpoints, salary ranges

Salary Bandcontrol points,

competitive pay zones

Job Family/Career Levelmidpoints, salary ranges

Discrete Market Pricingmidpoints, salary ranges

Job Evaluation Pointsmidpoints, point/pay values


MarketPay Client “Flash Survey”


Benchmarks are the starting point

A “market-priced” position whose pay levels are benchmarked, using compensation survey data, against “comparable” positions in relevant labor markets


Ensuring salary ranges are competitive

Fairly common to average the market data at each level to set midpoints

Also typical to smooth the progression between midpoints


Smooth the averages with regressionRegression line can be used to develop midpoints for each level


Pay positioning vs. the market

“Competitive” = market median (most typical)

Most organizations target market medians to develop competitive programs

More aggressive organizations may target pay at above-average levels

Attempts to target 60th, 62½ or 65th percentiles are not uncommonProblematic to use statistical measures other than median or average to set policyLess common now due to economic conditions


MarketPay clients target Market Medians


Strategic positioning of pay

Is it appropriate to position pay for all jobs the same?

Or, should you pay more based on the strategic importance of jobs?

Set pay policy for your most important jobs above market

Pay others at or below market


New approach enabled by technology

Not based on market-pricing of individual jobs

A typical client uses less than 1% of their survey data in benchmarksA fraction of the positionsA small fraction of the data cuts

Some organizations match survey jobs directly to their grades, and use technology to quickly and easily summarize entire surveys data


Mapping survey jobs directly to your grades

Publisher A

Renowned Expert

Master

Specialist

Career

Intermediate

Entry

Publisher B

Expert

Specialist

Senior

Experienced

Entry

Publisher C

Lead

Specialist

Career

Intermediate

Entry

=

=

=

=

=

=

=

=

=

=

=

=

=

=

=

Our Grade

14

11/12

9/10

7/8

5/6

3/4

=


Summarize your full survey library Pay levels can be averaged by (or regressed across) your grades


“Global grading” facilitates int’l analysis

Consistent structures and leveling across countries

Surveys have moved towards country-to-country consistency

Makes it easier to match jobs and develop ranges in a uniform fashion


Competitive pay ranges country by countryAfter matching standardized surveys to global grades, it’s quick and easy to develop market-based pay ranges in each country


Regional pay structures within the US

Or region by region in the US to develop localized structures

Isolate the Northeast data cuts from your

surveys


Summary

Market-based compensation programs are the predominant practice

Most common to use market-pricing benchmarks (individual jobs) as the basis for developing competitive salary range midpoints

Some organizations price their grades instead of jobs to facilitate the use surveys across countries and geographies

Technology is making all of this faster and easier, and bringing consultant-level tools to the compensation practitioner


How to Build aCompetitive Pay Structure with

Compensation Survey Data

Thank you!

www.marketpay.com


COMPview™Compensation Planning Software


answer questions

share resources

offer solutions

Strategy Session

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How to Build aCompetitive Pay Structure withCompensation Survey Data

How to Build A Competitive Pay Structure with Compensation Survey Data

Recruiting & HR

Transcript of How to Build A Competitive Pay Structure with Compensation Survey Data