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

CHAPT-10- SURVEYING MKT.

Surveying Market Pay & Compensation Practices


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


• 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


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


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.


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


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


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


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


Approaches Towards Market Survey

Benchmark Jobs Approach Low - High

Approach

Global Approach

Benchmark Conversion Approach

Market Basket Approach


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.


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


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.


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


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


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


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


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.


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


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


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.


DATA POINTS PRESENTATION

ScatterplotScatterplot

Scatterplot with Linear CurveScatterplot with Linear Curve

Developing a Pay Policy LineDeveloping a Pay Policy Line


PAY

Our Job Evaluation Points

ScatterplotScatterplot

120 160 200 240 280 320 360

surveymonthlysalary($000)

7

6

5

4

3

2

1

80


PAY


Scatterplot with Linear CurveScatterplot with Linear Curve

120 160 200 240 280 320 360


7

6

5

4

3

2

1

80

Line of Best Fit


PAY


Developing a Pay Policy LineDeveloping a Pay Policy Line

120 160 200 240 280 320 360


7

6

5

4

3

2

1

80

Line of Best Fit :using market-survey data(updated and aged to reflectpay policy)
