# Presentation: 317899

## The Role of Salary Surveys in Setting Pay

**Office of Personnel Management**
**Strategic Compensation Conference**
**August 29, 2000**

- dH

## Outline

**The ****BIG**** picture - Value Exchange**
**How pay is determined**
**Salary surveys**
**How surveys are used**
**What to look for in surveys**

## Value Exchange Theory

**Objective is **_**fair pay**_

## Fair Pay Employee Viewpoint

**Pay opportunities/ranges reflect value of each job/skill relative to other jobs/skills within the organization**
**Pay opportunities are competitive with similar jobs/skills in other organizations**
**Superior performance/skills are recognized and rewarded**

## Fair Pay Employer Viewpoint

**Employees view pay as fair**
**Pay program supports organization philosophy and strategies**
**Pay is affordable and legal**

## Achieving Organization Goals

**Achieving Organization Goals**

**Accomplished by people**
**Challenge**
**Attract**
**Retain**
**Motivate**
**Align**

## Value Exchange

**Value given for value received**

## The Employee Gives andthe Employer Receives

**Work Output**

**Loyalty**

**Judgment**

**Time**

**Good Work**
**Attitude**

**Best**
**Efforts**

**Talent**

**“****Extra Miles”**

## The Employer Gives and theEmployee Receives

**Pay**

**Incentives**

**Effective Supervision**

**Recognition**

**Challenging**
**Work**

**Fair**
**Treatment**

**Good**
**Working**
**Environment**

**Growth**
**Opportunities**

**Benefits**

## Fair Value Exchange is aGood Deal

**Conceptually, employer and employee are traders in a peer relationship**
**Employer achieves business goals and strategies**
**Employee achieves business-related personal goals**

## Sound compensation practice has duality
Win-win duality is part of value exchange

**Win-win duality is part of value exchange**

**Fair Value Exchange is a****Sound Compensation Practice**

## How Pay is Determined

**How Pay is Determined**

**Job**
**Descriptions**

**Job**
**Evaluation**

**Salary**
**Surveys**

**Salary**
**Structure**

**Performance**
**Management**

**Salary**
**Guidelines**

**Management Philosophy**

**Communication**

**$**

## Salary Survey

**A salary survey is a description of what companies pay for ...**

## What Do You Want To Pay For?

**Performance**
**Contribution**
**The “job”**
**What others pay**
**Education**
**Experience**
**Skills**
**What you have to**

**What you can afford**
**What supports the goals and strategy**
**What supports the desired culture**
**What you **_**want**_** to**
**Other ...**

## Work Model and Surveys

**Inputs**

**Throughputs**

**Outputs**

***Material***
***Capital***
***People***
***     ******Skills***
***     ******Knowledge***
***     ******Education***
***     ******Experience***
***     ******Behaviors***

***Work ***
***     ******Tasks***
***     ******Duties***
***     ******Jobs***
***Organization***
***     ******Hierarchical***
***    ******Teams***

***Products***
***Services***
***Results***

**Benchmark job surveys**

**Skills surveys**
**Maturity surveys**

**Design surveys**

## Salary Survey Typical Content

**Job/skill descriptions**
**Statistics on**
**Base pay**
**Total cash**
**Total cash plus equity**
**Details of bonuses**
**Details of long term incentives**
**Scope**
**Observations and trends**

## Example Survey Results

## Survey Uses

**Market position**
**overall for organization/department**
**by job or skill**
**by individual**
**Salary increase budgets**
**Pay ranges**
**salary structure for all grades**
**individual jobs or skills**
**Targeted salaries**

## Typical Survey Analysis Process

**1. Gather survey data**
**2. Age to common date**
**3. Develop market model**
***Use integrated market model approach with grades***
***Can segregate analyses into components***
**4. Compare employee salaries to model**
**This determines the market position**
**5. Address issues**
**6. Develop salary structure**
**7. Address issues**

## Market Model

## Assumption of Integrated Market Model Approach

**The market model is a good estimator of what the market would pay for **_**all**_** jobs, whether or not they were surveyed.**

## Market Position

## Market Position

## Salary Increase Budget

**Catch-up (or fall-back)****	****	****_____ %**
**Anticipated market movement****	****_____ %**
**Pay policy****	****	****	****	****_____ %**
**	****TOTAL****	****	****	****_____ %**

## Salary Structure

**Adjust as appropriate to develop administrative structure.**
**  **
**Parameters:  midpoint progression, range widths,**
**	****	****desired position within structure**

## Targeted Salary

**Range maximum**
**or**
**market P90**

**Range minimum**
**or**
**market P10**

**Range midpoint**
**or**
**market P50/wtd avg**

**Targeted salary**

**Current salary**

**Salary increase**

## Market Model when Grades Are Not Used (Steps 3 and 4)

## Market Position (Step 4)

## What to Look for in Surveys

**Jobs/skills, locations**
**Job descriptions**
**Participants**
**Job matching**
**Data collected**
**Results format**
**Options and special analyses**
**Usefulness and user-friendliness**
**Stability**
**Innovation and continuous improvement**
**Quality and reputation**

## Types of Surveys

**Closed surveys - must participate to get results**
**Steering committee/sponsor “owns” the survey**
**Industry groups, geographic groups**
**Must apply or be invited**
**Steering committee approves participation**
**Consulting firm “owns” the survey**
**Industry groups, geographic groups**
**Consulting firm approves participation**
**Open surveys - can obtain results without participation**

## How to Find Surveys

**WorldatWork**
**Catalog**
**Call**
**Compensation/HR consulting firms**
**Internet**
**Other organizations**

## The Role of Salary Surveys in Setting Pay

**Pay is just one factor in attracting, retaining, motivating, and aligning employees.**
**Market information is just one input to pay decisions.**
**Survey data form the basis for market information.**
**Must have quality surveys and sound statistical analyses to have credible starting point.**

**$**

## The Role of Salary Surveys in Setting Pay

**John H. Davis, Ph.D., CCP**
**Hewitt Associates**
**972-402-8700**
**jhdavis@hewitt.com**

- dH