Ever changing labor market conditions and supply demand fluctuations make sure that organizations don’t design employee compensation strategy in a vacuum. Success of your compensation strategy not only depends on your system’s ability to provide market data analysis during decision-making but also on how well you analyze the external data during your planning phase.
You start this exercise by deciding on the source of market data as per your industry benchmarks. Relying on multiple survey sources for market salary data will be more beneficial than depending on a single source. In case you opt for multiple sources, you need to decide on mathematical techniques you are going to use to combine multiple sources into an easily comparable source to make comparison with the internal data a smooth exercise.
Getting your current job descriptions updated into your internal system is a must have requirement before you proceed any further. While analyzing the survey data, you need to make sure that you are matching your detailed job description with benchmark job descriptions as matching just a job title or a brief summary can result in wastage of money, time and resources. You also need to have a plan in place for the cases where you don’t find job match in benchmark data.
How you utilize survey results after your internal analysis depends on your current or desired market position. Either you can decide to pay as per market dynamics or you can decide to lead the market. It’s very unlikely that you will decide to pay below market standards after putting so much effort in analysis. You can also opt for total compensation offerings to match or lead the market rather than focusing only on base pay.
It’s easier said than done, you need real experts for a detailed market data analysis internally as software in place will not help if you fail to analyze the data correctly.