how to build a competitive pay structure with compensation survey data
TRANSCRIPT
TalentTakeawayswebinar & podcast series
How to Build aCompetitive Pay Structure withCompensation Survey Data
AGENDAThe Series
TalentTakeawayswebinar & podcast series
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AGENDAThe Sponsor
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AGENDA
Brian SharpChief Marketing Officer
Mark AveryCEO
Our Presenters
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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
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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
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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
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MarketPay Client “Flash Survey”
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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
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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
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Smooth the averages with regressionRegression line can be used to develop midpoints for each level
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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
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MarketPay clients target Market Medians
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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
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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
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Mapping survey jobs directly to your grades
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Lead
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Summarize your full survey library Pay levels can be averaged by (or regressed across) your grades
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“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
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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
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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
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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
Talent Takeaways Series | Compensation
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
Talent Takeaways Series | Compensation
How to Build aCompetitive Pay Structure with
Compensation Survey Data
Thank you!
www.marketpay.com
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COMPview™Compensation Planning Software
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answer questions
share resources
offer solutions
Strategy Session
Resources & Support
Talent Takeaways Series | Compensation
TalentTakeawayswebinar & podcast series
How to Build aCompetitive Pay Structure withCompensation Survey Data