Make Salary Compensation Data Work For You

If you’re responsible for salary compensation planning in your organization, you know the problem: You’re using an outside salary survey to work out employee pay ranges for the next year. But the survey data was collected last year. The data is already out-of-date enough that you’re not comfortable using it as is.

PREFERRED ‘AGING’ METHOD
As you know, what you have to do is “age” the survey data – adjust it so as to take account of pay developments since it came out. But what method should you use? There are two ways to go about aging the data, but according to compensation specialist Ann Bares, of Altura Consulting Group, one way is much better than the other. Some HR people age the data forward by using what’s called “salary structure movement.” This is the estimated percentage by which surveyed organizations are moving their pay ranges to stay competitive. Trouble with using that figure, Bares says, is that you risk having your future pay scales come in low and uncompetitive. Why? Because structure movement reflects companies’ salary policies – which aren’t always adhered to in reality. She says structures are usually well below actual increases.

Better: Use the average salary compensation increase amount or salary increase budget, also provided in your salary survey. Bares says that’s the best indicator of how much individual employee salaries are moving in a year.

Source: http://compforce.typepad.com/

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