Questions and responses are gathered from WorldatWork's Online Community discussions as well as from WorldatWork social media accounts.
I am reviewing our current market pricing strategies to determine if we may need to make changes and hoped for some input on how you currently utilize market pricing, specifically:
- How often do you conduct market pricing for your classifications?
- Do you typically use the rate the market pricing produces, or do you shoot for something slightly less?
- How do you account for anomalies in pricing (abnormally high one year)?
- Do you utilize a lead/lag method?
- What current methodology are you using for aging data?
These are important questions to consider. (I think you’d find the Market Pricing course from WorldatWork to be very helpful.) In general, I would say the answers depend heavily on the size, type, culture, etc., of your company. That said, my suggestions will be colored, based on my company’s practices.
- We conduct regularly scheduled market pricing in anticipation of our annual budget planning cycle. We also conduct ad hoc market pricing for “hot jobs” or jobs that have changed significantly.
- This depends on your compensation philosophy. What does your company believe about how people should be paid? At the market median? Above? Below?
- I would seek to investigate whether the apparent anomaly is legitimate. Can you check another survey source for validation?
- Not sure what else you’d like to hear about this. Can you clarify?
- Take a look at the WorldatWork Quick Question: “If you age salary survey data, which source do you rely on for the aging factor?” Also, WorldatWork has an aging calculator that may be helpful: worldatwork.org/docs/ resources/aging-calculator.xls.
— Clayton Johnson Compensation Manager Vivint Smart Home
- You have to look at your ranges every year and make adjustments — otherwise, you have situations where jobs jump ranges unnecessarily and/or you are moving ranges in big jumps. You should look at placement of individual jobs within those ranges every two to three years, or when you sense any sort of disconnect.
- I’ve always lived in worlds where the salary range was picked based on the midpoint being closest to the market median.
- Management made a “gentleperson’s agreement” to take no immediate action but to revisit in a year.
- Do you mean the yin to the yang of your Question 5? If that’s what you mean, no; I’ve always aged the data.
- We religiously participated in our most important salary surveys annually, so we had reasonably fresh data. In those cases where aging was required (e.g., it was 10 months old), we would age using some sort of factor — e.g., add 10/12’s of whatever the factor was. Note: If you have reasonably current data, you have the leisure of not having to debate the underlying factor — if CPI is running at 2.3% and ranges last year increased, on average, 2.1% when you multiply by 10/12, there won’t be much difference when matching to a salary range midpoint (if it’s within two percentage points of the break between salary ranges, you want to be looking very closely anyway).
— Edward “Ned” Smith Senior Compensation Consultant PSE Co.
There are at least three WorldatWork co-sponsored surveys at the following link that will give you some answers: worldatwork.org/resources/surveys/ job-evaluation-and-market-pricing- practices
— E.K. Torkornoo, CCP CEO and Managing Director E.K. Torkornoo & Associates
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