1. Surveying Market Pay & Compensation Practices
CHAPT-10- SURVEYING MKT. 1

2. what is market SURVEY WHY?
The process of attempting to achieve external pay equity within the organization’s ability to pay constraint.
To elicit desired behaviors
To join the organization
To stay with the organization
WHY?
CHAPT-10- SURVEYING MKT.

3. Need for a market pay & compensation practices survey
Jobs having the greatest trouble hiring & retaining employees.
Where employees dissatisfaction centered.
Where quality & productivity problems appear to be most serious.
When it appears that market compensation trends outweigh internal rate relationship.
Market competition for particular skills or exotic talent most fierce.
CHAPT-10- SURVEYING MKT.

4. PURPOSE OF A MARKET SURVEY
To assess organizational wage and benefits practices relative to its competitors in either the relevant labor market, product/service market, or a labor market within a product/service market
To determine whether the firm’s wage and benefit package is competitive enough for attraction and retention of labor
CHAPT-10- SURVEYING MKT.

5. Purpose of a market SURVEY
Hiring & retaining competent employees.
Promoting employee productivity.
Developing an appropriate & acceptable pay structure.
Re-organizing pay trends in the marketplace.
Defending pay practices in a court of law.
CHAPT-10- SURVEYING MKT.

6. What is Markets
A geographic area in which employers and job seekers exchange pay and other work rewards for skills and behaviors required by the organization
CHAPT-10- SURVEYING MKT.

7. Market Conditions
Loose market: the supply of labor exceeds the demand for labor
Fixed market: the supply of labor is finite or fixed regardless of the demand for it
Tight market: the demand for labor exceeds the available labor supply
CHAPT-10- SURVEYING MKT.

8. Hire all the people needed
Market
Conditions
Employer Response
Loose
Market
Set high standards
Offer low wages
Hire all the people needed
Fixed
Pay what it takes for labor
Find substitutes for needed labor
Tight
Create incentives for individuals
to enter the market or acquire
skills demanded by employers
CHAPT-10- SURVEYING MKT.

9. Use of the National Labor Market
When there is limited skill availability within a regional or local geographic area
When the best career mobility and progression opportunities for persons possessing needed skills are within the industry
CHAPT-10- SURVEYING MKT.

10. Approaches Towards Market Survey
Benchmark Jobs Approach
Low - High Approach
Global Approach
Benchmark Conversion Approach
Market Basket Approach
CHAPT-10- SURVEYING MKT.

11. Preparing for survey.
Identification of market / organizations/ Compensation components.
Job to be surveyed.
Job contents.
Potential issues.
Methods to be used.
Job matching.
Class matching.
Job evaluation.
Occupational Survey Method.
CHAPT-10- SURVEYING MKT.

12. DEVELOPING PAY SURVEYS
Select Employers with Comparable Jobs
Determine Jobs to be Surveyed
Decide What Information Is Needed
Conduct Survey
CHAPT-10- SURVEYING MKT.

13. COLLECTING SURVEY DATA
Conducting Employer-initiated Surveys
Select key jobs.
Determine relevant labor market.
Select organizations.
Decide on information to collect: wages/ benefits/ pay policies.
Compile data received.
Determine wage structure and benefits to pay.
CHAPT-10- SURVEYING MKT.

14. PROCESS FOR MARKET SURVEY
Firms Chosen for Survey in the Product Market Should be in the primary or dominant industry
Should use similar technology
Should be of similar size, as measured by the number of employees
CHAPT-10- SURVEYING MKT.

15. PROCESS FOR MARKET SURVEY
Selection of Employers to Survey Random sampling:
Each organization within the defined labor market is equally likely to be chosen
Stratified random sampling: Sample chosen is biased in some meaningful way
Criterion-related selection: cross-section of companies in the labor and product market based on assessment of where current employees might seek alternative employment
CHAPT-10- SURVEYING MKT.

16. CUSTOM-DESIGNED WAGE & BENEFIT SURVEYS
How many paid holidays?
Christmas
New Year’s Day
Presidents’ Day
Good Friday
Memorial Day
Independence Day
Labor Day
Thanksgiving
M.L. King Day
Written questionnaires
Personal visits
Telephone interviews
CHAPT-10- SURVEYING MKT.

17. Designing the survey Letter of Transmittal
Organizational policy questions
Employee benefits questions
Merit review data
Job data
How many paid holidays?
Christmas
New Year’s Day
Presidents’ Day
Good Friday
Memorial Day
Independence Day
Labor Day
Thanksgiving
M.L. King Day
CHAPT-10- SURVEYING MKT.

18. Third-Party Surveys Occupational Compensation Surveys.
Federal Government Surveys
Occupational Compensation Surveys.
Employee Benefit Surveys.
Industry Wage Surveys. /Economic Research Institutes Surveys/Trade & Industrial Associations surveys.
Professional Association Surveys
Consultant-Generated Surveys-(WW / Hay Group/ Mercer/ Sidaat Hyder / Ferguson etc.
CHAPT-10- SURVEYING MKT.

19. Third-Party Surveys Advantages Disadvantages Data can be obtained
relatively cheaply
Data is reported to the
organization in summary
Data is statistically sound
Disadvantages
Data may be out of date
by the time its available
Relevance of data to key
jobs & to the labor market
may be questionable
Results may exclude key
issues to the organization
CHAPT-10- SURVEYING MKT.

20. Reporting Wage Data Mean - the arithmetic average of all wage
rates reported
Ranges
(minimum,
maximum)
Mode - the
most common
wage rate
reported
Standard
deviation
Interquartile
range - between
25th & 75th
percentile wage rate
Median - the
middle
wage rate
reported
Weighted
average
wage rate
CHAPT-10- SURVEYING MKT.

21. CRITICAL PAY SURVEY PROBLEMS
Obtaining a proper job match.
Collecting useful pay data.
Ensuring an acceptable sample of organizations and jobs.
Relating data to organizational pay policies.
CHAPT-10- SURVEYING MKT.

22. DATA POINTS PRESENTATION
Scatterplot
Scatterplot with Linear Curve
Developing a Pay Policy Line
CHAPT-10- SURVEYING MKT.

23. Scatterplot PAY Our Job Evaluation Points 7 6 5 4 3 2 1 survey monthly
salary
($000)
PAY 80
120
160
Our Job Evaluation Points
CHAPT-10- SURVEYING MKT.

24. Scatterplot with Linear Curve7 6 5 4 3 2 1
survey
monthly
salary
($000)
PAY
Line of Best Fit 80
120
160
Our Job Evaluation Points
CHAPT-10- SURVEYING MKT.

25. Developing a Pay Policy Line7 6 5 4 3 2 1
survey
monthly
salary
($000)
PAY
Line of Best Fit :
using market-survey data
(updated and aged to reflect
pay policy) 80
120
160
Our Job Evaluation Points
CHAPT-10- SURVEYING MKT.

26. CHAPT-10- SURVEYING MKT.