Building Market Competitive Compensation Systems
Pay must attract and retain ees Four major activities Conducting strategic analysis Assessing competitors’ pay with pay surveys Integrating the internal job structures with external pay Determine compensation policies
Step 1. Strategic Analysis SWOT
Step 2. Pay Surveys Pay Benefits Childcare What do we hope to gain?
What can we do vs. what do we need to change? What to they really want?
#1 Career development and advancement opportunities?
Using published survey info Professional organizations (SHRM) World At Work, collects comprehensive info Apdx end of chapter page #203 BLS..gov does salary services about 1. Wages 2. Compensation trends 3. Benefits
find DOL.gov find BLS find National Compensation Survey (NCS) Compensation Cost Trends (ECI) Employer Costs for Employee Compensation (ECEC) Look at benefits (NCS)
Occupational Classifications System Manual go to www.bls.gov/ncs/ocs/ocsm/commain.htm
Based on major occupational groupings
Choosing benchmark jobs Used as reference points Four 1. contents are well known, stable over time 2. jobs are common across a number of ers 3. jobs represent an entire range of jobs being evaluated 4. jobs are generally accepted in the labor market for the Purpose of setting pay levels Look #188
Compensation Survey Data Be aware 1. huge amounts of data to understand 2. data is outdated by the time it is published 3. use of statistical appropriate analysis Central tendency Mean scores Median score Variation Standard deviation
Updating Survey Data Why?
1. economy forecasts 2. costs of consumer goods . CPI Consumer Price Index Monthly report by BLS www.bls.gov
Integrating internal pay with external market pay rates Regression analysis #198 Regression analysis finds the best fitting line between two variables. Pay experts call this line the Market pay line.
Y = a + bX Y= predicted pay X= job evaluation points a= the Y intercept b= the slope
Policy and strategic change Companies can choose from 3 pay policies 1.Market lead 2.Market lag 3.Market match