Salary Surveys

Question 1

How to specify competitive pay policy?

Answer 1

Translate any external pay policy into practice requires information on the external market.

Question 2

How to obtain information on the external market?

Answer 2

Surveys- provide data for translating policy into pay levels, pay mix and structures.

Question 3

What is a salary survey?

Answer 3

Systematic process of collecting and making judgments about the compensation paid by other employers.

Question 4

What is the purpose of a salary survey? (5)

Answer 4

(1) adjust the pay level in response to changing rates paid by competitors
(2) adjust the pay mix relatie to that paid by competitors
(3) establish or price a pay structure
(4) analyze pay-related problems (e.g. unusual turnover)
(5) estimate labour costs of product/service market competitors (competitive intelligence)

Question 5

How to specify relevant market?

Answer 5

A relevant labour market which includes employers who compete:

(1) for same occupation or skills
(2) for employees in same geographic area
(3) with same products and services

Question 6

What to consider when designing the survey?

Answer 6

(1) who should be involved
(2) how many employers
(3) which jobs to include
(4) what information to collect

Question 7

Who should be involved?

Answer 7

It depends on the company

(1) compensation manager
(2) line managers and staff on task force
(3) external consultant

Question 8

Who should be involved in smaller companies?

Answer 8

HR generalist

Question 9

Why are line managers involved?

Answer 9

They understand the job best.

Question 10

How many employers to include?

Answer 10

No firm rule.

Question 11

How many employers to include for large companies with a lead policy?

Answer 11

6-10 top paying competitors.

Question 12

How many employers to include for smaller companies/companies that hold majority of the shares/companies that don’t sell similar products as others?

Answer 12

2-3

Question 13

What are the main sources of comparative data? Give examples.

Answer 13

(1) publicly available data (MOM)
(2) specialised survey (business associations, SHRI)
(3) consultant-based data (Mercer Consulting)
(4) data from specialist journals or newspaper (StraitsTimes, BusinessTimes)
(5) analysis of job advertisements

Question 14

How to search on the different salary survey structures?

Answer 14

Similar standards do not exist. Different consultants use different market surveys and analysis.

Question 15

What should be done when searching on the different salary survey structures?

Answer 15

Validate findings- through reliable and valid metrics.

Question 16

What are the approaches to determine what jobs to include?

Answer 16

(1) benchmark

(2) low high

Question 17

What is a benchmark approach?

Answer 17

(1) stable job content
(2) common across different employers
(3) sizeable no. of employees- include as many jobs from as many levels

Question 18

What is the low-high approach?

Answer 18

For skill-based structure, identify the lowest and highest paid benchmark jobs for the relevant skills as anchors

Question 19

If entry level worker A is paid $12/hr and the leader is paid $42/hr, how much would worker B be paid using the low high approach?

Answer 19

Between $12-$42/hr.

Question 20

What if the range is very big in the low high approach?

Answer 20

It will not be accurate.

Question 21

What information to collect?

Answer 21

(1) organisation data
(2) total compensation data
(3) incumbent and job

Question 22

What is organisation data?

Answer 22

(1) Financial performance

(2) Company size

Question 23

What is total compensation data?

Answer 23

(1) cash forms used (eg. base pay)
(2) non-cash forms used
(eg. benefits and services)

Question 24

What is incumbent and job data?

Answer 24

(1) date (Date survey data in effect)
(2) job (match generic job description)
(3) individual (education, years of service)
(4) pay (actual rates paid)

Question 25

How to interpret survey results and construct a market line?

Answer 25

Verify data.

Question 26

How to verify data?

Answer 26

(1) check accuracy of job matches

(2) check for anomalies

Question 27

What questions to ask when verifying data?

Answer 27

(1) does any one company dominate?
(2) do all employers show similar patterns?
(3) are there outliers?

Question 28

What is there to be aware of when handling compensation survey data?

Answer 28

(1) surveys do not make light reading- they contain a wealth of information
(2) survey data may be outdated - lag between when the data was collected and when employers implemented the compensation plan based on survey data
(3) compensation professionals may use statistical analyses to integrate their internal job structures (based on job evaluation points) with the external market based on the survey data

Question 29

What is a statistical analysis?

Answer 29

(1) frequency distribution
(2) central tendency
(3) variation
(4) quartiles
(5) percentiles

Question 30

What is frequency distribution for?

Answer 30

(1) helps visualise information and may highlight anomalies
(2) unusual shapes of frequency distribution may reflect problems with job matches, widely dispersed pay rates or employees with widely divergent pay policies

Question 31

What are the central tendencies?

Answer 31

(1) mode (most commonly occurring rate)
(2) mean (sum of all rates divided by number of rates)
(3) median (order all data points from lowest to highest; the one in the middle is the median)
(4) weighted mean ((total of all rates divided by total number
of employees)

Question 32

Which central tendency is affected by extreme values?

Answer 32

Mean

Question 33

What is variation?

Answer 33

(1) standard deviation (how tightly all the rates are clustered around the mean)
(2) quartiles and percentiles (order all data points from
lowest to highest, then convert to percentages)
– common measures in salary survey analysis

Question 34

What are quartiles?

Answer 34

Describe distribution of data based on four groupings.

Question 35

What does the second quartile correspond to?

Answer 35

Median

Question 36

What is the formula for quartiles?

Answer 36

Quartile value= [Fraction (n+1)] observation

Question 37

What are percentiles?

Answer 37

Describe distribution of data and there are one hundred percentiles ranging from the first percentile to the one hundredth percentile

Question 38

What is the formula of percentile?

Answer 38

Percentile value= Percent (n+1)

Question 39

How to update the survey data?

Answer 39

Aging or trending : Pay data is updated to forecast the competitive rates for the future date when the pay decisions will be implemented

Question 40

How to analyse and the results?

Answer 40

(1) all survey returns should be checked carefully (eg. correctly filled)
(2) timing is important (eg. strict deadline)
(3) what will provide the most meaningful results, what is the data actually based on, who will use the data?
(4) tools for analysis can range from simple average to statistical tool, and even regression analysis using computers

Question 41

How can results be presented?

Answer 41

Presentations can vary from simple histograms or bar charts showing salary scales paid, to complex statistical analyses producing computer printouts which present the data in relation to a number of different variables.

Question 42

How to use salary survey data?

Answer 42

(1) involves judgement and compromise
(2) use data as a basis to formulate the company’s own salary scales, considering its own pay posture policy
(3) no such thing as the correct rate for a job or even that the data obtained from a salary survey is 100% accurate