Post on 26-Dec-2015
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CHAPT-10- SURVEYING MKT.
Surveying Market Pay & Compensation Practices
CHAPT-10- SURVEYING MKT.
The process of attempting to achieve external pay equity within the organization’s ability to pay constraint.
To elicit desired behaviors To elicit desired behaviors • To join the organizationTo join the organization• To stay with the organizationTo stay with the organization
To elicit desired behaviors To elicit desired behaviors • To join the organizationTo join the organization• To stay with the organizationTo stay with the organization
WHY?WHY?
what is market SURVEY
CHAPT-10- SURVEYING MKT.
• Jobs having the greatest trouble hiring & retaining employees.
• Where employees dissatisfaction centered.• Where quality & productivity problems appear to be
most serious.• When it appears that market compensation trends
outweigh internal rate relationship.• Market competition for particular skills or exotic talent
most fierce.
Need for a market pay & compensation practices survey
CHAPT-10- SURVEYING MKT.
PURPOSE OF A MARKET SURVEY
– To assess organizational wage and benefits practices relative to its competitors in either the relevant labor market, product/service market, or a labor market within a product/service market
– To determine whether the firm’s wage and benefit package is competitive enough for attraction and retention of labor
CHAPT-10- SURVEYING MKT.
Purpose of a market SURVEY
• Hiring & retaining competent employees.• Promoting employee productivity.• Developing an appropriate & acceptable pay
structure.• Re-organizing pay trends in the marketplace.• Defending pay practices in a court of law.
CHAPT-10- SURVEYING MKT.
What is Markets
A geographic area in which employers A geographic area in which employers and job seekers exchange pay and and job seekers exchange pay and other work rewards for skills and other work rewards for skills and behaviors required by the organizationbehaviors required by the organization
CHAPT-10- SURVEYING MKT.
Market Conditions
• Loose market:Loose market: the supply of labor exceeds the demand for labor
• Fixed market:Fixed market: the supply of labor is finite or fixed regardless of the demand for it
• Tight market:Tight market: the demand for labor exceeds the available labor supply
CHAPT-10- SURVEYING MKT.
Loose Market
Set high standardsOffer low wagesHire all the people needed
Fixed
Market
Pay what it takes for laborFind substitutes for needed labor
Tight
Market
Create incentives for individuals to enter the market or acquire skills demanded by employers
MarketConditions
Employer Response
CHAPT-10- SURVEYING MKT.
Use of the National Labor Market
• When there is limited skill availability within a regional or local geographic area
• When the best career mobility and progression opportunities for persons possessing needed skills are within the industry
CHAPT-10- SURVEYING MKT.
Approaches Towards Market Survey
Benchmark Jobs Approach Low - High
Approach
Global Approach
Benchmark Conversion Approach
Market Basket Approach
CHAPT-10- SURVEYING MKT.
Preparing for survey. • Identification of market / organizations/
Compensation components.– Job to be surveyed.– Job contents.
– Potential issues.
• Methods to be used.– Job matching.– Class matching.– Job evaluation.– Occupational Survey Method.
CHAPT-10- SURVEYING MKT.
DEVELOPING PAY SURVEYS
Select Employers with Comparable JobsSelect Employers with Comparable JobsSelect Employers with Comparable JobsSelect Employers with Comparable Jobs
Determine Jobs to be SurveyedDetermine Jobs to be SurveyedDetermine Jobs to be SurveyedDetermine Jobs to be Surveyed
Decide What Information Is NeededDecide What Information Is NeededDecide What Information Is NeededDecide What Information Is Needed
Conduct SurveyConduct SurveyConduct SurveyConduct Survey
CHAPT-10- SURVEYING MKT.
COLLECTING SURVEY DATA
• Conducting Employer-initiated Surveys– Select key jobs.– Determine relevant labor market.– Select organizations.– Decide on information to collect: wages/ benefits/ pay
policies.– Compile data received.– Determine wage structure and benefits to pay.
CHAPT-10- SURVEYING MKT.
PROCESS FOR MARKET SURVEY
• Firms Chosen for Survey in the Product Market Should be in the primary or dominant industry– Should use similar technology– Should be of similar size, as measured by the
number of employees
CHAPT-10- SURVEYING MKT.
PROCESS FOR MARKET SURVEY
• Selection of Employers to Survey Random sampling: – Each organization within the defined labor market is equally
likely to be chosen– Stratified random sampling: Sample chosen is biased in
some meaningful way– Criterion-related selection: cross-section of companies in
the labor and product market based on assessment of where current employees might seek alternative employment
CHAPT-10- SURVEYING MKT.
CUSTOM-DESIGNED WAGE & BENEFIT SURVEYS
Written questionnaires
Personal visits
Telephone interviews
How many paid holidays?
Christmas
New Year’s Day
Presidents’ Day
Good Friday
Memorial Day
Independence Day
Labor Day
Thanksgiving
M.L. King Day
CHAPT-10- SURVEYING MKT.
Designing the survey
• Letter of Transmittal
• Organizational policy questions
• Employee benefits questions
• Merit review data
• Job dataHow many paid holidays?
Christmas
New Year’s Day
Presidents’ Day
Good Friday
Memorial Day
Independence Day
Labor Day
Thanksgiving
M.L. King Day
CHAPT-10- SURVEYING MKT.
Third-Party Surveys
• Federal Government Surveys• Occupational Compensation Surveys.• Employee Benefit Surveys.• Industry Wage Surveys. /Economic Research
Institutes Surveys/Trade & Industrial Associations surveys.
• Professional Association Surveys• Consultant-Generated Surveys-(WW / Hay Group/
Mercer/ Sidaat Hyder / Ferguson etc.
CHAPT-10- SURVEYING MKT.
Third-Party Surveys
Advantages•Data can be obtained relatively cheaply•Data is reported to the organization in summary•Data is statistically sound
Disadvantages•Data may be out of date by the time its available•Relevance of data to key jobs & to the labor market may be questionable•Results may exclude key issues to the organization
CHAPT-10- SURVEYING MKT.
Reporting Wage Data
Ranges (minimum, maximum)
Mean - thearithmetic average
of all wage rates reported
Mode - themost common
wage ratereported
Median - themiddle
wage ratereported
Standard deviation Interquartile
range - between25th & 75th
percentile wage rate
Weightedaverage
wage rate
CHAPT-10- SURVEYING MKT.
CRITICAL PAY SURVEY PROBLEMS
• Obtaining a proper job match.
• Collecting useful pay data.
• Ensuring an acceptable sample of organizations and jobs.
• Relating data to organizational pay policies.
CHAPT-10- SURVEYING MKT.
DATA POINTS PRESENTATION
ScatterplotScatterplot
Scatterplot with Linear CurveScatterplot with Linear Curve
Developing a Pay Policy LineDeveloping a Pay Policy Line
CHAPT-10- SURVEYING MKT.
PAY
Our Job Evaluation Points
ScatterplotScatterplot
120 160 200 240 280 320 360
surveymonthlysalary($000)
7
6
5
4
3
2
1
80
CHAPT-10- SURVEYING MKT.
PAY
Our Job Evaluation Points
Scatterplot with Linear CurveScatterplot with Linear Curve
120 160 200 240 280 320 360
surveymonthlysalary($000)
7
6
5
4
3
2
1
80
Line of Best Fit
CHAPT-10- SURVEYING MKT.
PAY
Our Job Evaluation Points
Developing a Pay Policy LineDeveloping a Pay Policy Line
120 160 200 240 280 320 360
surveymonthlysalary($000)
7
6
5
4
3
2
1
80
Line of Best Fit :using market-survey data(updated and aged to reflectpay policy)
CHAPT-10- SURVEYING MKT.