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Market pricing provides competitive compensation data for positions. We will review job descriptions to ensure an understanding of the position, and compare it to job summaries within the surveys. To establish the competitive market level, we will use multiple compensation surveys within our extensive research library, which includes confidential data sources we can provide.
Market pricing is the process of determining the competitive worth of a position. It is a vital step in the salary administration process. Inaccurate market pricing can result in an ineffective salary administration program, which could also impact a company’s performance management system.
In order to conduct a market study, it is important to understand the components of the position to be priced, as well as the competitive labor market (e.g., geography, industry, size) within which it competes. Once completed, the results of the market pricing can be utilized to develop a salary structure consisting of compensation grades and ranges. Market pricing should be done periodically to ensure competitiveness over time.
Market pricing can be accomplished by collecting data from published survey sources. These surveys can be based on either geography or industry. It is important to utilize as many relevant sources as possible in order to ensure an accurate comparison. Each survey has an effective date; therefore, all data must be aged to a common date, utilizing a prorated percentage of the average merit increase award in the competitive market. Once all data is aged, multiple measures of central tendency should be calculated, such as the average, median and weighted average, to determine the best estimate of the market value.
To find out more about how Compensation Resources, Inc. can help your company with market pricing, please contact:
Sara Schmidt, CCP, PHR, SHRM-CP