1 Market Pricing Organizations seek to offer market based pay rates in order to attract and retain competent employees There are two basic methods to recognize market wage rates: l Pure market pricing l Guideline market pricing method

2 Market Pricing Pure Market Pricing Pay Survey l The organization develops brief narratives that describe job activities and incumbent requirements. l The organization conducts pay rate survey of other organizations having employees who perform same work assignments in the same labor market. l Each position assigned pay rate based on market l This is the least costly method....It is easy to explain..…and judicially defensible.

3 Market Pricing Market Pricing Guideline Method The Evergreen Approach This approach permits the influences of internal equity to interact with existing market rates when determining the rate of pay for jobs of an organization.

4 Market Pricing Market Pricing Guide Line Method Steps STEP ONE: Establish a Guideline Scale (salary structure) with salary ranges that includes a series of salary grades and a minimum, mid-point, and maximum rate of pay for each using a 5% to 10% mid-point differential.

5 Market Pricing STEP TWO: Develop realistic job descriptions that include job scope data Identify benchmark jobs (40 to 60 jobs) Example: WA State uses 84 jobs as market pricing benchmark positions in setting the classified pay structure

6 Market Pricing STEP THREE: Use comprehensive market pricing surveys when matching benchmark jobs to other comparable employers jobs Define new pay rates and salary structure based market pricing

7 Market Pricing Tools l College and University Professional Association (CUPA) surveys. l Milliman Management & Professional Salary Survey l Salary data-on-demand software products including CUPA & Economic Research Institute l WA Employment Service/BLS Salary surveys

8 Why Five Salary Survey Tools The five salary surveys allow us to market price almost all of the exempt staff positions (146) and thus determine market pay levels for 80% of the exempt positions. The CUPA HR surveys allow us to select regional and national peer (enrollment level, public undergraduate) institutions for individual job pricing and determination of competitive salary range for exempt administrative and professional positions. ERIs Salary Assessor allows market pricing of exempt position salary rates in higher education and in the Olympia labor market area. The Milliman Salary Survey gives us a market pay comparison of our professional and managerial salary levels with those in the Northwest (Washington, Oregon & Idaho). The Washington State Employment Security Department and the USDOL Bureau Labor Statistics conduct annual salary surveys by occupation on a statewide basis.

9 Advantages of Market Pricing Surveys The advantages of professional salary surveys are: Lower cost Large number of jobs and organizations Focus on specific labor markets/industry Conducted by professional research group Consistency of survey from year to year Survey market at same time each year

10 Market Pricing Advantages Advantages Include: l Measure college pay rates against the pay rates of similar organizations & markets. l Selects benchmark positions by level from across the college for market pricing. l Ensures pay structure based on external market pay rates for equivalent positions. l Allows update of salary structure using initial benchmark positions

11 Determinants of Pay Structures and Rates Determinants of Pay Structures and Rates l Job Evaluation Scope & Level of Job Responsibility Skill & Ability Supervision Qualifications l Determines Pay and Rate/Range for Position Market Pay Rate & Range l Specific Occupation by Geographic Area Market Pay Rate & Range Specific Occupation by Industry Higher Education Institutions

12 ESTABLISHING MARKET PAY STRUCTURE l Identify benchmark jobs l Define recruiting/labor marketing l Determine going market rates ($) l Structure midpoint line l Pay grades range – min & max

13 Recruiting Market is Market Pricing Focus l Recruiting Market for Evergreen

14 Recruiting Market is Market Pricing Focus Recruiting Market for Evergreen

15 Developing Colleges exempt salary structure l Select 40 to 50 benchmark positions to set up salary structure l Review survey data and establish market rate for benchmark positions l Plot college exempt salary pay line and compare to market pay line l Select overall market pay goal (50 th percentile) for exempt pay program

16 Developing Colleges exempt salary structure l Determine the number salary grades and salary grade midpoints l Set up structure by determining midpoint to midpoint differences l Determine salary grade range spread by setting minimums and maximums l Market price rates on non-benchmark positions (146 of 181) 80% l Complete exempt salary structure and slot all positions into a salary grade based on market pricing

17 Evergreen Exempt Staff Market Pay Goal l Use market survey pay data to set pay goal for exempt staff salary program l Exempt staff pay goal is 50 th percentile overall l Exempt staff pay (on average) is currently at 47 th percentile

18 Evergreen Compensation Factors Major Compensations Factors Include: Scope of Responsibility - appraises the positions breath and depth of either administrative or managerial influence. Supervision - appraises the number (head count & FTE) and responsibility level of the employees. Accountability - appraises the position's accountability for the allocations of resources and program results.

19 Evergreen Compensation Factors Major Compensations Factors Include: Communication skills - is the appraisal of the positions requirement for proficiency in interpersonal, oral and written skills. Professional Capability Requirements - appraises minimum Knowledge, Skill & Ability (KSAs); education; experience and training necessary to perform the job. Creative Professional Performance - Focusing on primary duties, appraises the positions involvement with work activities requiring problem solving, invention, imagination, originality or talent in a recognized professional field.