Consideration when building market competitve compensation system
Pay levels fall below the market pay line. Companies value jobs that possess higher degrees of compensable factors 10 years of experience than jobs with fewer degrees of compensable factors 1 year of experience resulting in pay differences based on compensation survey data.
Internal consistency in compensation
The textbook and slide 11 provide a list of consulting firms that specialize in compensation. Determining compensation policies 1. Please look at the textbook for brief descriptions of the CPI and their calculations that help you to understand how we can update our salary survey data to project relevance between the start and end of our compensation plan. We need to make corrections for these differences and we rely on our judgment to do so. So the first, conduct strategic analyses and this is something that we would hope that other areas of HR are looking at. And you can also find levels of costs per hours for employee compensation. So for example 0 to 3. But we are trying to explain the variation in the Y variable based on variation in the X variable. And even when we find benchmark jobs, we have to be very careful not to simply match those jobs with jobs within our company. You can look at slides 23 through 27 up to refresh your memory of these descriptive statistics.
Members are more likely to provide information in anonymous surveys to their professional associations because they all have a common interest in understanding what the compensation pay rates and structures are in a particular profession.
All of this requires that we call on statistical analyses to make sense of these data and to make these adjustments. So when we talked about seniority pay for example, that has the potential to lead to employee complacency because as long as they're providing a performance at some reasonable level, they will get a pay increase just because they've been there over time.
Internal consistency or market competitiveness
So you will see many companies going to external sources to obtain compensation survey data and what are some of the sources? So now let's give some thought to, in a bit more detail, to these four activities. Companies value jobs that possess higher degrees of compensable factors 10 years of experience than jobs with fewer degrees of compensable factors 1 year of experience resulting in pay differences based on compensation survey data. That's a fairly typical number. So let me back that up, that's the application here. No job is worth 0 points. I've indicated some ranges here and given them labels. Pay rates fall along the market pay lines.
We have to quantify what we mean by those labels and in compensation typically market lead policies are referenced at the 75th percentile. In the area of compensation, there is a wealth of data.
As I mentioned there are differences between a company's jobs and benchmark jobs.
Defining competitiveness in compensation
Pay level policies are usually described in one of three ways. We can find the mix perhaps between merit pay that will sit well with subjective measures and incentive pay for objective performance measures. As always if you have questions I'll be glad to answer them. Pay levels fall below the market pay line. The textbook also provides a brief summary of each of the surveys that I mentioned. Not surprisingly, surveys contain a lot of data, so much data that eyeballing it provides no insights into what they mean. When we get to employee benefits later in the course we will talk about some of the breakdown in costs of various benefits components. So average pay rate in the engineering profession. The first is to explain the concept of market competitive compensation systems and summarize the four activities that compensation professionals engage and to create the systems. So we rely on these benchmark jobs as established, well-known and stable jobs that we find in the market that are typically common across employers that represent the entire range of jobs in different occupational groupings that we will accept for setting pay rates within our company. So we are interested in ensuring that our pay rates are not only current at the beginning of the plan year, but also over the course of the plan year. This is learning objectives 3 and slides 29 through 33 contain the information. The market pay line is the regression equation that comes from the analysis.
So for every dollar we spend, what percentage of that is going to these various components. So typically we are looking to collect data on base pay, incentive award structure and the mix in level of discretionary employee benefits. Well this concludes the pre-recorded session for internal consistency, that leads to job structures and market competitiveness.
Professional associations often have compensation survey data that they share with its member organizations and individual members of the organization.
based on 52 review