In today’s Advisor, Rizzuti, who is a principal at PHR Compensation Resources, Inc. in Upper Saddle River, NJ, shares her 10 keys for effective market pricing.
1. Collect Good Job Information
Ensure that job descriptions accurately portray the job duties and responsibilities. Many jobs have changed in the past few years. Pay special attention to “hybrid” jobs, says Rizzuti. There are many of these now as companies have let staff go and those remaining have taken on additional responsibilities.
2. Select benchmarks
Benchmarks are common positions that most organizations have and that are well-defined. Ideally, Rizutti likes to have about 70 percent of positions in the benchmark jobs.
Make sure the benchmarks cover a cross-section of workforce, different area, different levels, and so on.
3. Identify “Hot” Jobs
In many organizations there will be “hot” jobs that have to have special treatment. For example, right now Rizzuti is seeing:
- Mission Integration positions in hospitals
- Compliance positions
- IT Security positions
Also take a close look at the finance department, says Rizzuti. She’s seeing CFO positions combined with COO positions, and finance taking responsibility for regulatory compliance.
4. Ensure Consistent Job Titling
Have title of a job be representative as much as possible of what job consists of. Even so, she says, don’t market price just to title; you have to price to responsibilities.
5. Match Benchmark Jobs to Survey Jobs
It’s best to use at least 2 or 3 sources if possible, says Rizzuti, but that’s too expensive for some organizations. If you are going to rely on one one data source, make sure that it has data from a rich respondent group. If not, it won’t be indicative.
6. Collect Data on Fixed and Variable Pay
As yesterday’s Advisor pointed out, philosophies differ and you want to see what compensation philosophy is behind the data you are using. For example, if the surveyed companies are low base/high variable, you need to know that to make sense of their pay numbers.
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7. Calculate Market Data
Most compensation managers use central tendency measures like mean and median to aggregate data from several sources.
8. Analyze
Utilize market data and analysis as basis for evaluating your existing pay structure. Are some sectors falling behind? Are all falling behind? Any other problems apparent?
9. Change as Necessary
Do you need to change? If so, should you move entire ranges, or only ranges for certain departments or sectors (e.g., part-time, executive).
Whatever you decide to do, document it. You must preserve the intelligence about why decisions were made.
10. Slot Jobs
Finally, slot your benchmark jobs into the pay structure. Then, slot in the non-benchmark jobs based on internal equity and similarity to benchmarks.
Aligning to market is never an easy task; fortunately there’s timely help in the form of BLR’s new February 21 webinar—Market-Based Compensation: Legal and Practical Essentials for Keeping Top Talent. In just 90 minutes, you’ll learn everything you need to know about market-based compensation in 2012. Register today for this interactive webinar, and learn how to keep the feds and the attorneys at bay and your organization in compliance.
Economy Picks Up, Employees Pack Up
Now that the economy is picking up, your employees are starting to look around to see what else is out there; you need a market-competitive salary structure to attract and retain the best talent.
And if you’re like most companies, you’ve got unsatisfied employees who have struggled through years of little or no pay growth, longer hours, and fewer helping hands. Employers must realize that if they don’t keep up, their best employees will jump ship when a better offer comes their way.
How can you be sure you’re competitive?
One approach is a market-based compensation structure. Obviously, you want to pay a competitive rate, but you don’t want to over-pay. To achieve the perfect balance, you must know what competitors and like-positions in the same geographic area are paying for similar jobs.
A market-based pay structure will also make your organization a desirable landing pad for employees who are looking for a better opportunity.
Considering a market-based compensation structure? Now’s the time to act. Learn more in the all-new BLR/HR Hero webinar, Market-Based Compensation: Legal and Practical Essentials for Keeping Top Talent. Click here to find out more.
Approved for Recertification Credit
This program has been approved for 1.5 recertification credit hours toward PHR and SPHR recertification through the Human Resource Certification Institute (HRCI).
By participating in this interactive webinar, you’ll learn:
- How market pricing uses market rates to determine pay ranges and individual employee pay rates
- How to use market pricing to assess your current pay competitiveness currently and the best practices for updating it
- The advantages and disadvantages of market pricing versus other job evaluation methodologies
- How to acquire and apply salary survey data to your specific positions
- Important salary data elements and how they apply to you
- Tips for using aging and extrapolating data that keep your organization moving forward
- How to use key survey groupings to replicate your company’s characteristics
- And there’s more. Visit the "Full Webinar Details" tab for more information.
- The market rate for each position in your organization and how to use that information to determine a pay range
- Tips for applying market pricing to incumbent pay ranges as well as new positions
- Important salary data elements and how they apply to you
Register now for this event risk-free.
Market-Based Compensation:
Legal and Practical Essentials for Keeping Top Talent
Tuesday, February 21, 2012
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Join us on February 21—you’ll get the practical ins and outs of market pricing AND you’ll get all of your particular questions answered by our experts.
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I’m glad you mentioned getting data from multiple sources and the need to know philosophies. You can’t just go by ads you see online for what appear to be similar positions.