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CHAPT-10- SURVEYING MKT. Surveying Market Pay & Compensation Practices.

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  • Slide 1
  • CHAPT-10- SURVEYING MKT. Surveying Market Pay & Compensation Practices
  • Slide 2
  • CHAPT-10- SURVEYING MKT. The process of attempting to achieve external pay equity within the organizations ability to pay constraint. To elicit desired behaviors To join the organization To join the organization To stay with the organization To stay with the organization To elicit desired behaviors To join the organization To join the organization To stay with the organization To stay with the organization WHY? what is market SURVEY
  • Slide 3
  • 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
  • Slide 4
  • 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 firms wage and benefit package is competitive enough for attraction and retention of labor
  • Slide 5
  • 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.
  • Slide 6
  • CHAPT-10- SURVEYING MKT. What is Markets A geographic area in which employers and job seekers exchange pay and other work rewards for skills and behaviors required by the organization A geographic area in which employers and job seekers exchange pay and other work rewards for skills and behaviors required by the organization
  • Slide 7
  • 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
  • Slide 8
  • CHAPT-10- SURVEYING MKT. Loose Market Set high standards Offer low wages Hire all the people needed Fixed Market Pay what it takes for labor Find substitutes for needed labor Tight Market Create incentives for individuals to enter the market or acquire skills demanded by employers Market Conditions Employer Response
  • Slide 9
  • 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
  • Slide 10
  • CHAPT-10- SURVEYING MKT. Approaches Towards Market Survey Benchmark Jobs Approach Low - High Approach Global Approach Benchmark Conversion Approach Market Basket Approach
  • Slide 11
  • 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.
  • Slide 12
  • CHAPT-10- SURVEYING MKT. DEVELOPING PAY SURVEYS Select Employers with Comparable Jobs Determine Jobs to be Surveyed Decide What Information Is Needed Conduct Survey
  • Slide 13
  • 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.
  • Slide 14
  • 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
  • Slide 15
  • 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
  • Slide 16
  • CHAPT-10- SURVEYING MKT. CUSTOM-DESIGNED WAGE & BENEFIT SURVEYS Written questionnaires Personal visits Telephone interviews How many paid holidays? Christmas New Years Day Presidents Day Good Friday Memorial Day Independence Day Labor Day Thanksgiving M.L. King Day
  • Slide 17
  • CHAPT-10- SURVEYING MKT. Designing the survey Letter of Transmittal Organizational policy questions Employee benefits questions Merit review data Job data How many paid holidays? Christmas New Years Day Presidents Day Good Friday Memorial Day Independence Day Labor Day Thanksgiving M.L. King Day
  • Slide 18
  • 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.
  • Slide 19
  • 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
  • Slide 20
  • CHAPT-10- SURVEYING MKT. Reporting Wage Data Ranges (minimum, maximum) Mean - the arithmetic average of all wage rates reported Mode - the most common wage rate reported Median - the middle wage rate reported Standard deviation Interquartile range - between 25th & 75th percentile wage rate Weighted average wage rate
  • Slide 21
  • 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.
  • Slide 22
  • CHAPT-10- SURVEYING MKT. DATA POINTS PRESENTATION Scatterplot Scatterplot with Linear Curve Developing a Pay Policy Line
  • Slide 23
  • CHAPT-10- SURVEYING MKT. PAY Our Job Evaluation Points Scatterplot 120160200 240 280 320 360 survey monthly salary ($000) 76543217654321 80
  • Slide 24
  • CHAPT-10- SURVEYING MKT. PAY Our Job Evaluation Points Scatterplot with Linear Curve 120160200 240 280 320 360 survey monthly salary ($000) 76543217654321 80 Line of Best Fit
  • Slide 25
  • CHAPT-10- SURVEYING MKT. PAY Our Job Evaluation Points Developing a Pay Policy Line 120160200 240 280 320 360 survey monthly salary ($000) 76543217654321 80 Line of Best Fit : using market-survey data (updated and aged to reflect pay policy)
  • Slide 26
  • CHAPT-10- SURVEYING MKT.
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