In terms of retention, market data might make it clear why people are leaving, or point to there being more work to do elsewhere. Meanwhile, remuneration for new roles can be benchmarked appropriately, writes Craig Cameron.
Market data provides organisations with key remuneration insight that allows them to inform their own practices and account for industry or sector trends.
When companies use data collected via regular surveys across multiple industries to gain insight into market remuneration, they can adapt their practices appropriately. For some companies, this may serve to reinforce their current practices. Others may find ways to become more competitive.
How we collect meaningful market data
The process of collecting market data involves collating the latest information across a number of different remuneration categories:
• Base salary – the before-tax cash salary or wages paid to an individual, not taking into account any extra payments they earn, such as bonuses.
• Fixed remuneration – base salary plus any benefits that are offered by the company, such as vehicles, insurances, KiwiSaver or professional association fees.
• Total remuneration – base salary, plus benefits plus incentive payments such as bonuses or sales commission.
All of the data provided undergoes a thorough cleaning and review process to ensure it makes sense and can be turned into a truly useful analysis.
Market data is divided and categorised so that organisations using the data can compare against similar industries, roles or sectors:
• Salary by quartile: Salary data is divided into lower, median and upper quartiles so that organisations can see what the lower or higher ends of the scale look like as well as averages for each component.
• Job categories: Roles are categorised by job size as well as job title. The latter, also known as job code, is analysis dedicated to a specific role, such as an accountant or engineer. Job sizing involves sorting data according the type of role and level of responsibility – such as executive positions or entry-level roles.
• Industries or sectors: Both of the above types of analysis feed into industry-specific remuneration reports, as there may be different pay requirements for the same role in certain fields or geographic regions. It’s also divided by sector, that is the private, public, general market or not-for-profit sectors.
In each case, the base salary, fixed remuneration and total remuneration is display for detailed comparison.
How companies should use market data
Before organisations can make the best use of market data, they need to properly assess what benefits they already provide.
They may offer a car park, for example, but have not considered it part of the pay package. It’s also advisable to look at incentive payments in terms of not only what has been paid out, but what’s potentially available.
When organisations receive market data, they need to compare the survey outcomes with their own practices. They should consider:
• If they are at the middle, above or below the market rate.
• What benefits or incentives they offer.
• How their bonus component compares with other organisations.
It’s up to the organisation to decide whether change is required. Organisations that discover their pay is at the lower end of the scale can decide whether to use the benchmark data as something to aspire to, or accept that they can’t afford to increase base salaries but could change the benefits they offer through negotiations with providers.
They could look at how they offer benefits or incentives, and for companies amongst the highest payers, they can think about how they communicate the information to staff by way of reassurance.
In terms of retention, market data might make it clear why people are leaving, or point to there being more work to do elsewhere. Meanwhile, remuneration for new roles can be benchmarked appropriately.
Craig Cameron is a consultant at Strategic Pay.