Everyone’s talking market pricing, but many are not doing it well. Even with limited resources, you can take the steps to align your pay structure with the market, says consultant Mary A. Rizzuti CCP, PHR.
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.
Step … away … from the keyboard! Your job descriptions are already written. Click here to see why thousands of managers have a permanent place in their offices for BLR’s classic Job Descriptions Encyclopedia.
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.
OK, back to step one—Ensure that job descriptions accurately portray the job duties and responsibilities. What’s the status of your job descriptions? Are they up-to-date, and ADA-compliant? Detailed enough to help? Essential skills delineated?
If not—or if you’ve never even written job descriptions—you’re not alone. Thousands of companies fall short in this area.
It’s easy to understand why. Job descriptions are not simple to do—what with updating and management and legal review, especially given the ADA requirement of a split-off of essential functions from other functions in the description. Wouldn’t it be great if your job descriptions were available and already written?
Actually, they are. We have more than 700, ready to go, covering every common position in any organization, from receptionist right up to president. They are in an extremely popular BLR program called the Job Descriptions Encyclopedia.
First created in the 1980s, the “JDE” has been continually refined and updated over time, with descriptions revised or added each time the law, technology—or the way we do business—changes.
Prewritten job descriptions in the Job Descriptions Encyclopedia now come with pay grades already attached. Click here to try the program at no cost.
Revised for the ADA, Pay Grades Updated
There was a major revision, for example, following the passage of the ADA. In fact, BLR editors reviewed every one of those 700 descriptions to ensure they were ADA-compliant.
Another enhancement was the updating of pay grades for each job. According to our customers, this is an enormous time-saver, enabling them to make compensation decisions even as they define the position. You can see a sample job description from the program by clicking here. (Yes, it is the one for HR Manager—Pay grade: 37.)
The BLR Job Descriptions Encyclopedia also includes an extensive tutorial on setting up a complete job descriptions program, and how to encourage participation from all parts of the organization. That includes top management, the employees, and any union or other collective bargaining entity.
Quarterly Updates, No Additional Cost
Very important these days, quarterly updates are included in the program as a standard feature—key at a time of constantly changing laws and emerging technologies. We’ll send you new or revised descriptions every 90 days. And the cost is extremely reasonable, averaging less than 43 cents per job description … already written, legally reviewed, and ready to adapt or use as is.
You can evaluate BLR’s Job Descriptions Encyclopedia at no cost in your office for up to 30 days. Get more information or order the Job Descriptions Encyclopedia.
Download product sample
Download list of job descriptions included