Transcript City of Kalamazoo

Collecting Market Data
Presented to NPELRA
April 15, 2002
Bruce G. Lawson, CCP
Fox Lawson & Associates LLC
(602) 840-1070
6 Steps
Define Compensation Philosophy and
Market Pricing Strategies
Select and Review Survey Sources
Match Jobs to Survey Sources
Interpret Published Data
Determine Market Rates
Make Policy and Program Decisions
Compensation Philosophy
 Base Compensation or Total Compensation?
 How do you define your competition?
• Industry type, size, location
 What is your target market position?
• Average, 50th percentile, 75th percentile
 How will the pay structure be tied to the
market?
• Structure policy
 What is the targeted comparison of actual pay
versus market pay?
• Actual pay versus midpoint pay relative to
the market
Selecting Survey Sources
 Published data versus custom survey
 Is the survey sponsor reputable?
 Are the survey job descriptions adequate for
good matching?
 How large is the survey sample?
 How current is the data?
 Is the survey cost effective?
Job Matching
 Benchmark jobs should exist in similar form in
the marketplace
 Match should be based on description - not
title
 Make sure numbers used are consistent (mean,
median, etc.)
 Focus on essential duties and qualifications
 Determine if all data sources are equal
Interpreting Data
Be consistent in using statistics (mean,
percentile, etc.)
Trend analysis and regression analysis
Weighted or un-weighted data
Internal equity versus market parity
Correlation co-efficient (R square)
Determining Market Rates
 Trend or age all survey data to a common date
 Apply adjustments to jobs based on
Philosophy/strategies
• Across the board,
• job by job
• Occupational group
• Level of job
 Lead, Lead-Lag, or Lag
Policy Decisions
 How competitive is your current system or
plan?
 How are you using your compensation dollars?
 What do you want you pay plan to do for you?
 What can you afford to do?
 What is the business climate in which you must
operate?
Key Steps
 Gather and analyze pay data and practices at the total
compensation level if possible
 Integrate market data with a job evaluation plan to
design pay structures that blend market parity and
internal equity
 Perform more advanced statistical analyses to develop
pay structures with increasing, rather than constant,
midpoint differentials
 Perform detailed cost analyses in relation to issues such
as the implementation of new pay structures or the
development of merit increase matrices and salary
increase budgets