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Collecting Market Data. Presented to NPELRA April 15, 2002 Bruce G. Lawson, CCP Fox Lawson & Associates LLC (602) 840-1070. 6 Steps. Define Compensation Philosophy and Market Pricing Strategies Select and Review Survey Sources Match Jobs to Survey Sources Interpret Published Data
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Collecting Market Data Presented to NPELRA April 15, 2002 Bruce G. Lawson, CCP Fox Lawson & Associates LLC (602) 840-1070
6 Steps • Define Compensation Philosophy and Market Pricing Strategies • Select and Review Survey Sources • Match Jobs to Survey Sources • Interpret Published Data • Determine Market Rates • Make Policy and Program Decisions
Compensation Philosophy • Base Compensation or Total Compensation? • How do you define your competition? • Industry type, size, location • What is your target market position? • Average, 50th percentile, 75th percentile • How will the pay structure be tied to the market? • Structure policy • What is the targeted comparison of actual pay versus market pay? • Actual pay versus midpoint pay relative to the market
Selecting Survey Sources • Published data versus custom survey • Is the survey sponsor reputable? • Are the survey job descriptions adequate for good matching? • How large is the survey sample? • How current is the data? • Is the survey cost effective?
Job Matching • Benchmark jobs should exist in similar form in the marketplace • Match should be based on description - not title • Make sure numbers used are consistent (mean, median, etc.) • Focus on essential duties and qualifications • Determine if all data sources are equal
Interpreting Data • Be consistent in using statistics (mean, percentile, etc.) • Trend analysis and regression analysis • Weighted or un-weighted data • Internal equity versus market parity • Correlation co-efficient (R square)
Determining Market Rates • Trend or age all survey data to a common date • Apply adjustments to jobs based on Philosophy/strategies • Across the board, • job by job• Occupational group• Level of job • Lead, Lead-Lag, or Lag
Policy Decisions • How competitive is your current system or plan? • How are you using your compensation dollars? • What do you want you pay plan to do for you? • What can you afford to do? • What is the business climate in which you must operate?
Key Steps • Gather and analyze pay data and practices at the total compensation level if possible • Integrate market data with a job evaluation plan to design pay structures that blend market parity and internal equity • Perform more advanced statistical analyses to develop pay structures with increasing, rather than constant, midpoint differentials • Perform detailed cost analyses in relation to issues such as the implementation of new pay structures or the development of merit increase matrices and salary increase budgets