Good salary administration allows you to be competitive in the market

by on June 16, 2009 · 0 Comment POSTED IN: HR Info Center

Benchmarking in salary administration

So how do you benchmark?
There are some good software packages out there for salary administration. I like the stuff. Now, most of you have heard of and think of it as the devil. You know, is where your employees go to find out that they’re paid too little by their pay in New York City and telling you that – in Cleveland that they ought to be paid what a New York City person ought to be paid.

That’s a poor use of the salary administration process. They have a more detailed process here. There are other vendors and other kinds of systems or for many of you who choose cheaper actually, not even to bother the software to hire somebody who has already got it, to hire somebody who has already got the data and to get this done for you.

What they do is they take your salary administration data; they enter in all the information. They put in your geography. They define the scope. And what they figure out the base salary is usually composed on three important things. It’s based on your company’s size, your industry, and your geographical recruiting area. So, if you’ve got 10,000 people, it’s very different than if you have 100 people, okay? The market will tell you how these jobs vary from company to company.

A profile for salary administration
Here’s an example of what a profile would look like for any given job. Again, it’s relatively quick and simple and relatively painless.

Now, you can either hire somebody to do this for you or you can do it yourself. It will tell you the base pay, the total cash compensation. It will tell you what the 50th percentile looks like – it’s right in the middle of the market, depending on how you talk about this. That can be the 100th percentile. So it all depends on what you – how you like to structure these numbers. But that’s the middle of the market, okay?

Now, same job someplace else would be paid dramatically more. Different jobs, same area might be paid less. So you figure this out for every one of your jobs. These are just different kinds of jobs, different places. And you put those together on your matrix.
Edited remarks from the Rapid Learning Institute webinar “How to Drain the Drama from Salary Reviews: A Conversation Roadmap” by Gary Markle

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