Labor Market: Getting It Right

Posted on March 3, 2011 by HumanCapitalAdviser.com
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Matching or determining what goes together is a basic human cognitive ability. If you have children, you probably witnessed the surprising desire and ability of very young children to put similar things together.  More than once, I wandered through the house looking for a missing toddler to find her building a mountain of shoes, dividing folks from knives on the kitchen floor, or placing different colored CDs in different piles.  My niece has grown up in a household full of pets.  My sister loves animals and has added to her collection regularly over the last 20 years.  When my niece was young they had a dog.  She learned to call it a “doggie” and laughed a very contagious laugh whenever she saw the family pet.  In time, my sister added a cat to her household.  The cat was similar in color to the dog so it became a “doggie” too.  When we are children, we build in a systematic fashion on the knowledge we already possess.  My niece built on her image of a dog and decided the cat was the same since it had four legs, fur, ate out of a bowl, and was fun to pet. She loved to play fetch with the dog and in time discovered that the cat was not a “doggie” since no matter how many times she threw a stick the cat just sat there and stared at her.

Design Salary Survey Questions

The twin determinants of basic validity of a labor market survey are which jobs are included and who are the competing organizations.  Both are heavily impacted by how well we complete the matching process.  If we make incomplete assumptions about “similar” jobs or organizations, we may find like my niece that not all four legged creatures are the same or do the same things.   As was discussed in the last post, there are some basic questions that need to be answered before we create our labor market survey.  We should strive to match our survey process as close as possible to what we want to accomplish.

 

Once we have these answers, we should ask the following questions to ensure that we have good data for matching:

  • What jobs should be included?
  • What organizations should we compare ourselves to?
  • What do we want to compare?

What jobs should be included?

Once we know the parameters of what we want to know, comparable or similar jobs need to be selected.  Although some of us might plan to survey every job in our organization, only the smallest of entities will be successful at a comprehensive approach due to time and resource limitations on your organization as well as those responding.  The selected jobs need to be representative of the family or series being analyzed, represent a significant number of the current incumbents in that family or series, and comparable in your relevant market.  This list can be created by human resource professionals, functional managers, or discussions with employees.  The factors that we need to know about the jobs for peer matching purposes include function, duties, reporting relationship, level in family or series, and job scope (financial or non-financial).  Job selection and job matching once the data is collected are the most critical elements of the survey effort.

What organizations should we compare ourselves to?

Once we know the jobs we are concerned about, the organizations for comparison should be identified.  This question is best answered broadly and then in a most specific manner.  Defining the relevant labor market is the first step.  This geographic area represents the pool that your organization can lose as well as take employees.  Within that pool, similar organizations needs to be identified based on similar services, division of labor, staffing, size, location, and market practices.  Once the data is collected, this should be revisited to ensure appropriate comparison.

What do we want to compare?

The last major question pertains to the actual data that will be made available after completing the collection process.  Some of the most common data includes base salary, total cash, non-cash payments, and benefits.  The survey could ask about ranges, averages, medians, distribution (percentiles), or actual values.   In order to understand how an organization got to where it is, it is becoming more common to ask about how employees are reward and how they impacts their pay level and position.

Matching Salary Survey Questions

Now that the survey is created, it is time to discuss the analysis.

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