In yesterday’s Advisor, expert Lena Bottos offered her 10 Steps to Effective Market Pricing. Today, her take on anti-trust issues and an introduction to a unique 10-minutes-at-atime training system.
If I call colleagues in other companies to see what they are paying, am I creating a Sherman Anti-Trust Act violation? It’s likely, but there are safe harbor provisions, says Bottos, Vice President of Compensation at data provider Kenexa. Her suggestions came at a recent webinar sponsored by the company.
What’s the Practice in the Field?
Attendees at the webinar were divided on the issue of contacting peers—59 percent do not, while 41 percent do. Bottos doesn’t recommend the practice.
The Sherman Anti-Trust Act was passed in 1890. It prohibits price-fixing. In1982, a Boston survey group was found to be price-fixing salaries. It wasn’t a survey as we think of it today. These companies got together and asked themselves how much a secretary should make—and then paid the agreed amount.
Eventually, in early 1990’s, survey safe harbor guidelines were developed. To fall under the safe harbor,
- The survey must be conducted by a third party. If you are part of a local comp or HR group, you must have third party do your survey, Bottos says.
- Data must be at least 3 months old, so no one’s using real-time data.
- Each disseminated statistic must have five companies reporting data.
- You should not be able to identify an individual or a company
- No individual company’s information can represent more than 25 percent of each disseminated statistic. (So no one’s controlling the market, Bottos says.)
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“Every day I see surveys that don’t follow these guidelines,” Bottos says. Some groups she knows of have a lawyer on duty at meetings, to be sure there are no violations.
The good news is, there is a lot of data out there, so you should be able to get the information you need without going to your competitors, Bottos adds.
How Many Surveys Should You Use?
A poll of attendees at the webinar revealed that most companies represented use from 2 to 5 surveys. This figure is somewhat lower than it has been, Bottos says, but with the economy as it is, if companies aren’t giving increases, they’re not spending as much on surveys. In addition, there has been a consolidation in the survey market, she notes.
By the way, says Bottos, you can overcomplicate market pricing; don’t buy more survey data than you can manage.
Bottos has a word of caution, however, for those who use only one survey. Typically, this tends to be a local survey, and those seem to be the least stable. They often go away for a year, so you need a backup.
Compensation issues, one of what, 20 things you need to train managers and supervisors on? Training is critical, but it’s tough to fit it in. To train effectively, you need a program that’s easy for you to deliver and that requires little time from busy schedules. Also, if you’re like most companies in these tight budget days, you need a program that’s reasonable in cost.
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