Transcript No Slide Title

Survey Comparables
Survey Comparables & Proposal Costing
Presented to NPELRA
March 29, 2004
Bruce G. Lawson, CCP
Fox Lawson & Associates LLC
(602) 840-1070
Market Position
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Considerations in obtaining data
Alternative survey analysis methods
Sources of data
Conducting custom surveys
Survey data analysis
Reasons for Obtaining Data
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Pricing jobs
Trend analysis
Pay practices
Special Purposes
Alternatives
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Purchased surveys
Participate in sponsored surveys
Custom third party surveys
Conduct your own custom survey
Decision Factors
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Cost
Time
Reliability
Confidentiality
Availability
The Labor Market
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Local
Regional
National
Industry
Function
Size
Varies by level/job type
Conducting Surveys
• Select benchmark jobs
• Select organizations to be surveyed
• Type
• Size
• Number
• Gather, review and verify information
• Analyze data and build model
structure(s)
• Report results to participants
Selecting Benchmark Jobs
• Jobs should be matchable (Police Officer, Fire
Fighter)
• Jobs should reflect large numbers of employees
within the organization when possible
• Jobs should reflect a cross section of
occupational groups or job families
• Jobs should cover all hierarchical levels within
the the group of jobs under study
• Job should be clearly defined
Collecting Benchmark Data
• Data collection instrument should contain
benchmark summaries for participants to
reference in matching their positions to
benchmark jobs
• Summaries should contain pertinent
information and be concise
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Level of job
Title of who the job reports to
Title(s) of who the job supervises, if applicable
One sentence duty statements reflecting job content
Education and experience requirements
How Many Surveys
• Purpose of the survey
• Determine structural pay practice
• Price specific jobs/functions
• Organizational culture
• Market competitiveness
• Internal relationships
• Type of jobs
• Benchmark or non-benchmark
• Reliability of data
Survey Participants
• Organizations that compete with your
organization for employees (recruit from,
lose to, or directly compete for the same
talent pool)
• Employers that reflect the general labor
market(s) in which you compete for
personnel
Participant Guidelines
• No less than 50% of the size of your
organization
• No more than 200% of the size of your
organization
• Organizations that serve similar
populations (both in terms of size and
community character)
• Organizations that have similar economic
bases
Survey Participation
• Number of participants will depend on
the number of labor markets and the
number of jobs being surveyed
• Who are your competitors
• Consideration should be given to
number of potential non-respondents
• Expect 50-70% participation rate
Survey Participation
• Minimum of 10 participants, although all
jobs may not have 10 data points
• Under recent legal developments of
Sherman Antitrust Act, at least 5 matches
per benchmark are required for sufficient
data to draw conclusions
• Survey output should be aggregated
rather than showing individual
organization data
Review of Data
• Review job match information
– guidelines for matching job content is
70% (variation in duties will always exist,
but if 70% or more of the job content is
similar, the match is considered a good
match)
– two different titles should not be
matched to one benchmark job, this
produces unreliable results
Review of Data
• Review job match information (cont’d)
– some practice applying a job-specific
“adjustment” factor to increase or decrease
market data based on perceived degree of
match -- this should be used with discretion
as it is subjective and cannot be factually
defended
– data can be “weighted” by organization if it
is felt that the match is significantly better
from one source than another
Review of Data
• Follow-up with participants on questionable
matches or data, ask for their job description
• Look at titles, number of incumbents in job
and salary rates reported for reasonableness
• Perform statistical analysis to determine ‘red
flags’ in data reported (outlier analysis, t-test)
Analysis of Data
• Statistical measures
• Average (unweighted or weighted)
• Place in market
• Percentile (25th, 50th, 75th)
• Updating or trending data to current timeline
• Adjustments for geographic differences
• Your position versus the market
• Job to job
• Jobs by grade (Internal Equity)
• Structure to structure
• • Overall trend comparison
Analysis of Data
• Regression Analysis
• Line of best fit by job family or whole
structure
• Predicts market pay rate corresponding
to job evaluation level
• Produces two values which are utilized in
equation to calculate predicted pay
rate,
given a job evaluation rating
Analysis of Data
• Regression Analysis
• By plugging-in any job evaluation
rating into the equation, the predicted
pay for that level can be determined
• Pay rate = (job evaluation rating times the
x-coefficient value) + constant value
• This predicted pay rate then becomes the
anchor-point for new salary structure
(i.e., midpoint of structure)
Valuing the Package
• Determine elements of total compensation
• Base pay
• Variable pay
• Benefits
Base Pay
• The results of the compensation survey will
generally provide a baseline amount or
percentage that you are off the market.
• Determine whether you are making offer based
on average off the market or on a job by job
basis
• Cost base pay adjustment by applying to
current employee population data file
Variable Pay
• Determine what is included in the variable pay
component of the contract including:
- Skill based pay
- Educational incentives
- Shift differentials
- Labor market premiums
- Performance pay
- Bonuses
- Longevity
Variable Pay
• Cost out any anticipated increases in the
variable pay components
• Total the costs for variable pay
• Calculate a percentage of total payroll based
on the total dollars being spent
Benefits
• Determine which benefits are to be included in
the total compensation mix. Typically, they will
include:
– Pay for time not worked (vacation, sick leave,
holidays, bereavement leave, jury duty)
– Insured benefits (medical, dental, life, disability)
– Employer paid retirement contributions
– Legally required payments (Social Security)
– Other cash payments available to all employees
Benefits
• For insured benefits, total the premiums paid for all
coverages and calculate a percentage of payroll for
these benefits
• Pay for time not worked is more difficult
• Total the number of days available to all employees and
multiply that by the hourly rate of the applicable
employee (this can be a significant effort if you have a
large number of employees)
• Add the amounts for all employees together to
determine a total cost. Divide total by total payroll to
calculate a percentage of payroll.
Determine Offer Value
• Total the dollar amounts for each of the three
components (base pay, variable pay, and benefits)
• Divide that total by total payroll
• The result is the percentage cost