Managing salary surveys – Part III
All data needs to be inputted into a database to be analyzed properly. Excel or SPSS are valid packages one can opt for to carry out this analysis.
The process will include matching the surveyed jobs with the companies’ jobs as explained above. We cannot base all on the job titles provided.
2. Analysis of data
The data has to be reviewed. The expert needs to understand, identify, and compensate for any data that is out of the ordinary (data that is outside the marketplace parameters). Try to grasp whether there is a plausible explanation to this divergence. But, before you discard such data, be sure to have a valid explanation and reason for doing so. Never assume that they are collection errors. If it is obvious that the input from one company is ‘swinging’ the results to an extreme, and that this input is not representative of the market, then you are justified in eliminating this data.
The statistical analysis of the data is the most complex aspect since if one does not have the right platform to analyse or lacks the statistical skill and experience to carry out such analysis, then rest assured that the end result will be incorrect.
From a purely technical aspect, the expert will calculate the mean (the mathematical average) and the median (or also known as the 50thpercentile). Percentiles are typically also calculated. These are usually the 25th(lower quartile) and 75th(upper quartile) percentiles. In lay man terms, this would mean that, for the 75thpercentile, 75% of all data fall below the rate.
3. Understanding the data
To be able to understand the data, companies tend to summarise the distribution of pay rates in the market by using a market pay line. Companies would need job evaluation points (through a job evaluation exercise) and the data collected. The job evaluation points are usually plotted on a horizontal axis and the market rates on the vertical axis. The company then plots each benchmarked job at the appropriate intersection and a line is drawn. Excel may be used to do the market pay line. This will determine whether the company is leading, matching or behind the market.
If there are jobs which are paid outside of the organisation’s current compensation policy, the reasons must be explored. Amendments to the salaries may need to be done. If the incumbent of that particular job is being paid above market rates and there is no reason for it to be so, then instead of raising their salary at next pay review, companies may decide to either freeze until the market catches up or simply provide a one-time bonus that year, based on performance. This will be done instead of not giving any pay rises. If, on the other hand, the incumbent of the particular job is being paid below market rates, action needs to be taken to increase that pay to at least the minimum of the market. This could be either through a one-time adjustment or increases spread over a period of time.
4. Sharing the results
Transparency in the results can only be achieved by communicating the results to employees. This should be done once the results are shared with management and any decisions on pay amendments are endorsed. A compensation policy, together with the process the company undertook to arrive to such a policy, needs to be properly communicated to all employees.
Conducting salary surveys is indeed a complex, detailed process which requires expertise and a skill. Results can easily be swayed if any element is executed incorrectly by a non-professional. The labour market is a very dynamic place and market rates are continuously changing. For a company to remain relevant, it needs to constantly monitor the market and respond effectively to any changes that could challenge its competitiveness. Salary surveys are a professional tool that will help ensure companies remain dynamic and, most importantly, relative, and competitive.
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About the author
Maria Bartolo Zahra is Managing Director and HR Advisor at SurgeAdvisory. She has over fifteen years of human resources and business advisory experience.