1. Building Market- Competitive Compensation Systems
Chapter #8

2. 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

3. Step 1. Strategic Analysis
SWOT

4. 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?

5. 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

6. find DOL.gov find BLS find National Compensation Survey (NCS)
Compensation Cost Trends (ECI)
Employer Costs for Employee Compensation (ECEC)
Look at benefits (NCS)

7. Occupational Classifications System Manual
go to
Based on major occupational groupings

8. 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

9. Compensation Survey Data
Be aware
huge amounts of data to understand
data is outdated by the time it is published
use of statistical appropriate analysis
Central tendency
Mean scores
Median score
Variation
Standard deviation

10. Updating Survey Data Why? 1. economy forecasts
2. costs of consumer goods
. CPI Consumer Price Index
Monthly report by BLS

11. 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

12. Policy and strategic change
Companies can choose from 3 pay policies
1.Market lead
2.Market lag
3.Market match