Market Pricing - Conducting A Competitive Analysis (C17/GR17) Flashcards
What is one way market pricing supports an organization’s business strategy?
Provides key competitive information on how the organization’s compensation level compares to the market.
A compensation philosophy includes….
Statement of what the organization believes about how people should be rewarded.
Relevant labor markets is….
Market(s) from which an organization draws and loses its employees.
Lead - Lag
Company’s pay philosophy is to stay ahead of the market the first half of the year, then fall behind the market in the second half of the year.
An organization that is new with few or no formal policies is most likely in what stage?
Start- Up
Start-Up Stage is…
The organization is new with few or no formal policies or procedures. The
organization’s focus is on obtaining capital, marketing products or services, initial sales
growth and cash conservation.
Growth stage is…
In this stage, the organization is highly focused on growing sales, increasing
distribution capability and determining how to efficiently produce products or services
to meet growing demand. Growth typically generates the need to begin standardizing
procedures through policy creation.
Mature stage is…
he mature stage is characterized by a focus on maintaining/increasing market
share, improving productivity and otherwise reducing cost of sales. Improvements to
products are more evolutionary than revolutionary. The organization typically has higher
levels of bureaucracy and greater amounts of cash on hand than at other stages.
Decline stage is…
– At this point, the organization’s revenues are declining. It must decide whether
to reinvest in current products, create new products or maximize profits with current
products as long as possible.
Life cycle of a company - 4 stages
- Start-Up
- Growth
- Mature
- Decline
Pay Range
the range of pay rates, from minimum to maximum, established for a pay grade
Slotting
Act of placing a job into a job worth hierarchy established by a method other than the company’s primary job evaluation method.
Market Rate Composite
Market rate composite results from combining market rates for the
same job from multiple survey sources.
When using market-based job evaluation, what percentage of jobs in the organization should be benchmarked?
At least 50%
Benchmarking
a job that is commonly found in many
organizations and used to make pay comparisons
When building a job worth hierarchy using market date, what is the purpose of using job descriptions?
Identify benchmark jobs and match to survey job description.
What is an advantage of market- based job evaluation and pay structure design?
Simple to administer.
What is an advantage to a published survey?
You may receive a discount if you participate in the survey.
What information should documentation of sources and processes include?
• Specific surveys used and why
• Measures of central tendency used
• Practice of selecting the most appropriate number of surveys to calculate the prevailing
market rate accurately (may vary from job to job, depending on whether averages
are skewed).
• Method of aging the data from multiple surveys to a common point in time
• Method of developing market rate composite for each job
If cost is a factor, what survey should you least likely consider?
Custom third-party survey
How do you measure the market for high-demand jobs?
Focus on individual employees with specific skills
What is a component of data integrity?
The extent to which the survey has been audited.
What data is typically requested by surveys?
Wage rate or salary.
NOT: Employee gender and age
What is usually located in an HRIS?
Information related to individual employees
NOT: information related to groups of employees nor spreadsheet applications useful for gathering and sorting information.
