In a BLR webinar entitled "Compensation Strategies: How to Build a Market-Competitive Salary Structure that Retains and Attracts the Very Best," Diana D. Neelman, CCP of Compensation Resources, Inc. explained how to age survey data to the present day when researching market rate salaries.
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Get Your Report Now!Say, for example, survey data indicates an average salary of $20,500 effective January 1, 2011. The data needs to be indexed to November 1, 2011 and an annual adjustment factor of 3.0%.
Determine the number of months between the survey's effect date and the adjustment date. In this case, the difference is ten months.
Adjust the survey data to account for the time difference:
- 3.0% divided by 12 months equals 0.25% per month.
- 0.25% multiplied by 10 months equals 2.5% total adjustment.
Increase the survey data by 2.5% to determine the salary for the specified date, e.g., $20,5000 increased by 2.5% equals $21,000.
You can also calculated the mean, median, trim mean and market composite.
- Mean is the simple average.
- Median is the middle number.
- Trim mean is the average that eliminates the high and low data elements.
- Market composite (MC) is the average of the Mean, Median and Trim Mean and represents the best estimate of the market value for the position.
Regression may also be utilized.
Diana D. Neelman is a Principal and Senior Consultant with Compensation Resources, Inc.. (www. compensationresources.com) She manages the research and data analysis relative to the design and implementation of comprehensive compensation programs. Ms. Neelman is responsible for the development of written policy and communication materials, including plan documents, policies and procedures manuals and administrative forms that support the plan designs. She is also responsible for developing and conducting training programs covering various compensation topics. Furthermore, she oversees CRI's Survey Department, which published various compensation and benefits studies each year.
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