COMPENSATION & BENEFITS

SURVEY
Externally Competitive & Internally aligned
 Objectives of the session
 How to develop Compensation & salary
surveys to determine Compensation policies
 Interpreting Survey Results
 How to develop wage / salary surveys to
determine pay policies
 Statistics in Compensation Administration
 How to analyze salary survey data
 Calculating Compa-Ratio and its use
 International Comparisons
 Compensation Survey
 Organizations have to bridge the gap between
the industry standards and their salary
packages. They cannot provide compensation
packages that are either less than the industry
standards or are very higher then the market
rates. For the purpose they undertake the
salary survey. The Salary survey is the research
done to analyze the industry standards to set
up the compensation strategy for the
organization.
External competitiveness
refers to the pay relationships
among organizations - the
organization’s pay relative to its
competitors.
What Shapes External Competitiveness?

LABOR MARKET FACTORS

Nature of Demand
Nature of Supply

PRODUCT MARKET FACTORS

Degree of Competition EXTERNAL
Level of Product Demand COMPETITIVENESS

ORGANIZATION FACTORS
Industry, Strategy, Size
Individual Manager
Different Job Evaluation Systems/ Compensation
Survey Methods

SCOPE OF COMPARISON

JOB AS JOB PARTS

BASIS FOR A WHOLE OR FACTORS
COMPARISON (NONQUANTITATIVE) (QUANTITATIVE)

Job vs. job Job ranking Factor comparison

system system

Job vs. scale Job classification Point

system system
Steps for completing the Compensation &
Salary survey
Step- 01 Determining 'benchmark' positions
 Characteristics of a Benchmark Jobs

 The contents are well-known, relatively stable,

and agreed upon by the employees involved

 The supply and demand for these jobs are

relatively stable and not subject to recent shifts

 They represent the entire job structure under

study
 A majority of the workforce is employed in

these jobs
 Step-02 Determine market to survey

 Where does labor supply comes from

 Most white-collar and blue-collar employees are hired
locally.
 Technical, administrative and professional employees
may be attached to the local area. But they often come
from and go to other areas of the cities or even adjacent
cities / provinces. Some managers and professionals
operate in national or even international markets.
 Most companies confine their wage and salary surveys
to local or regional markets. Surveys containing
national or international data are usually secured from
professional organizations, or from consultants.
 Step-03 Determine firms to survey

 Survey firms in the same industry. Such

organizations are more likely to have all of the jobs
of the surveying organization and usually have
similar wages.
 Survey organizations hiring employees with
similar skills. Include firms that hire substantial
numbers of employees for the jobs being surveyed.
 Survey different sized organizations. Ideally,
your survey will include a balance of organizations
of varying size. But extremely small firms may
represent non-comparable labor markets.
 Step-04 Data Elements to Consider
for Surveys
Survey Organizations information
 Financial performance (Operating budget, Assets, Annual

revenue, sales etc.)

 Size, Structure, Contact information, Working conditions,

Standard work week

 Cost of living increase

Nature of Total Compensation System

 Cash forms used

 Non-cash forms used

Incumbent and Job

 Job, Number of incumbent in the job, Average salary (sum of the

salaries /no of incumbents), Salary range, Start salary,

 Reporting relationship
Step-05 Designing the questionnaire form
 Assurance of Confidentiality
 Survey Analysts, Results only to participants, Coding of
Participant Information.
 Access to results?
Step-06 Identification of participants
 Selection of participants can affect the results. Local businesses,
Associations of employers (within one industry), Other salary
surveys, Previously surveyed companies
 Criteria for selection of participants
 Contacting the Participants
 Letter sent to HR Manager or Compensation Manager to
announce the survey and request participation. This letter
should include information on the participation deadlines,
contact information for answers to questions.
 Step-07 Distribution of the survey

 Questionnaire (mail, fax, internet, personal

visit)
 well-acquainted compensation professionals, a
telephone survey may be used to acquire
compensation policy data
 If the questionnaire is lengthy you may want to
mail it only to participants who respond to the
initial letter.
 A visit by qualified personnel is usually the
most productive method of gathering
Step-08 Data Collection
Step-09 Coding of Responses
Step-10 Follow up (phone / email)
 Non Respondents; Need more time? Deadline

extension?
 Incomplete Responses; Missing Data; Failure to

report data on common positions

 Extreme Responses

 Above ranges

 Annualized salaries
 Analyzing Survey Data

 Frequency distribution organizes data

 Measures of central tendency
 averages or means
 weighted means
 medians
 Measures of distribution, or dispersion
 percentiles and quartiles
 range spread
 Compa-ratio

In the simplest form, a one-position company paying $45,000 for a

position that has a competitive level of $50,000 would have a
compa-ratio of 45/50 or 90%.
Here‘s the formula for determining a compa-ratio…
 Compa-ratio = average rate actually paid / midpoint of the range
rate.
Compa-ratio meanings
 1 = Market match rate
 < 1 = Market lag rate
 > 1 = Market lead rate