Essentially, deriving a market rate involves an approach incorporating both the role evaluation and market pricing. As was explained in a previous section, positions are evaluated for internal worth based upon the factors of Process Capability, Process Improvement and Scope. This results in a hierarchy of positions and is the first step leading to the establishment of the market rate for each role zone. After a role is evaluated for internal value to the institution, it must be compared to similar positions in other organizations to ensure a competitive salary opportunity is provided. Consequently, appropriate matching based on responsibilities, is critical.
Most salary surveys focus upon fairly generic positions within well defined functions.
When there is a lack of market data for a position, the evaluation is used to derive a market rate which is comparable to that of similarly valued positions within the institution. Both of these tools are reviewed annually for maximum effectiveness. Occasionally, the salaries of certain roles increase in the competitive market at a faster pace than others as the result of new technology or lack of people with the necessary skills to perform these roles. To remain competitive, it may be necessary to increase the market rates of these positions more aggressively than others. Leadership will have input on market rate development.