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. described the basic elements to a market price:
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- Base salary
- Total cash compensation, which includes the value of annual incentives and bonuses
- Employee benefits, which are an important component of total rewards
- Long-term incentives -- typically for executive positions
Below are some common survey sources for market pricing data:
- Published surveys from the government, associations or survey/consulting organizations
- Subscription databases (beware of free services!)
- Self-administered surveys
- Internet surveys
- Peer organizations (use with caution to avoid anti-trust issues)
When job matching, don't match by job title! Look at the job content and read job summaries in published surveys. A 70-80% match is ideal. Remember to match by various demographic inputs including industry, geography and company size (i.e., revenue and number of employees).
Then the key market pricing steps are to:
- Identify the benchmark jobs (at least 50-70% of all unique jobs).
- Match the benchmark jobs to survey jobs.
- Collect market data into a spreadsheet.
- Analyze the market data; age to a common date and calculate the central tendency.
- Compare the internal data to the market data.
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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