Building Market Competitive Compensation Systems

Chapter #8

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 data is outdated by the time it is published 3.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