Untitled Deck Flashcards
(25 cards)
what are market surveys?
collect data on “employee salaries and benefits across different industries, regions and jobs.”
what is the primary purpose of market surveys?
act as “benchmarking tools to enable companies to make informed business decisions about compensation.
what does using market surveys allow orgs to do?
“maximize the return on investment (ROI) of your compensation programs” by preventing both overpaying and underpaying for skills
why use market surveys?
-compare with other orgs
-track pay increases and market movements
-provide input into the remunerations policy and strategy
-put pay scales to the job grades
-set entry rates or new graduate starting salaries
what is a mean?
“the sum of the individual figures divided by the number of items.” Useful for general benchmarking.
what is a median?
the middle number of a particular range placed in rank order.” Often preferred for benchmarking because it “reduces the impact of the more extreme higher salaries” and is “less skewed by extreme high salaries
what is a weighted average?
Used when data is skewed or there are large numbers of employees at certain salary points to provide a more representative picture.
what is the distribution of salaries?
Averages alone don’t give a full picture. Salary distributions are often “positively skewed,” meaning a few high salaries pull up the mean.
why is job matching important?
-success of a salary survey “will stand or fall by how well the jobs were matched with one another
job matching relies on several criteria such as?
-industry
-sector
-location
-size of org
-range of resps
-Job size and complexity or level in the organisation
common pitfalls of job matching?
“Title-Only Matching” is unreliable as it can “mask differences in actual responsibilities.
best practice of job matching
Utilise more detailed methods such as “Summary description of role and reporting line,” “Capsule job or role description,” “Complete job or role descriptions,” and ideally, “Job evaluation” to ensure “jobs of similar size and complexity are compared
what are the types of salary surveys?
club surveys
published surveys
club surveys
-Involve organisations forming “survey circles” to share salary and benefits information on an agreed basis.
-Pros: Can be “Custom, high accuracy (shared among similar firms).”
-Cons: “Limited participants, confidentiality risks.” Membership criteria are crucial to ensure comparability
published surveys
-Provide broad data from various sources.
-Pros: “Broad data, standardized.”
-Cons: “Less specific, may lack industry nuance.”
Evaluating published surveys requires assessing the “core competence of the producers,” the “survey based on,” the “participant list,” the “data collection method,” and the “methods of job matching
what determines executive pay?
-“Organisation size” (turnover, employees, assets),
-“Organisation performance” (profitability, ROI),
-“Executive specific factors” (age, experience),
-“Organisation structure,”
-“Job- or position-specific factors,” -“Job complexity.”
defining the market for CEOs
problematic due to the unique nature of some roles and industries. A “robust methodology” is needed to select comparable organisations
Factors to consider for CEO besides financial components
-Holding, subsidiary or single-unit organisation,”
-“Private, public or state owned enterprise,”
-“Monopoly or many companies,” -“Complexity of industry or market,”
-“Listed or not,”
-“Job content
governance related to CEO pay?
Impeccable governance is mandatory.” “Well-trained RemCos” (Remuneration Committees) are essential, supported by “Comprehensive RemCo packs” and access to “top remuneration experts.”
conflicts relating to exec pay
“Cherry-picking survey data” is a common issue.
Solutions include a “clear definition of the market” and a “good anchor for the CEO’s package.
guidelines for setting pay
-Defensible is the key word.” Pay should be tied “directly to the value delivered.”
-“Market norms are a valuable guide.”
-“Robust remuneration policies and strategies are a must.”
selecting comparators for benchmarking
Choosing comparators of “similar size” using factors like:
-“Turnover/income/budget,”
-“Profit,”
-“Number of employees,”
-“Market capitalisation,” and “assets” is a good starting point. However, other criteria like
-“Complexity and type,”
-“Market or customer,”
-“Organisation structure,”
-“Location of business,” “Ownership structure,” and “Geographic location” should also be considered.
what are common challenges and solutions in pay benchmarking?
“Poor Job Matching,” “Outdated Data,” and “Bias (Selectively choosing high comparators)” are identified as reasons why benchmarking can fail.
Solutions: “Use Multiple Surveys” for cross-validation, ensure “Regular Updates,” and consider an “Independent Review” for objectivity.
