As a Total Rewards Leader can you conduct a competitive pay analysis? Payroll can account for more than 40% of a company’s operating budget. That is significant! You can turn to your labor market data, or surveys from government and private sources for help with setting competitive pay rates. Valerie Bolden-Barrett suggests these six steps:

1. Review your company’s current pay rates 2. Develop detailed job descriptions 3. Learn to understand labor-market survey statistics 4. Select surveys for your type of business. 5. Compare your company’s current pay rates with the surveys 6. Set pay scales with maximum and minimum rates

You must comply with state and federally mandated minimum-wage requirements and union contract agreements if your company is unionized. However, beyond these restrictions, you decide what wage rates to pay, according to the U.S. Small Business Administration.

You can Test Your Knowledge below by answering a few sample questions from the WorldAtWork’s Classroom Course for ‘Market Pricing-Conducting a Competitive Pay Analysis’. Quiz yourself honestly before checking the answers below.

1. Choose the market position that matches the following description: The company’s pay philosophy will stay ahead of the market the first half of the year, then fall behind the market.

A. Lead B. Lead-lag C. Lag D. Leap

2. In market pricing, job rates are set based on what criterion? A. How a job is valued internally B. A company’s best estimate of typical wage rates in the external market
C. A company’s data regarding current internal wage rates D. How a job is classified when compared to other jobs within the structure

3. Which of the following terms refers to the act of placing a job into a job worth hierarchy? A. Pay range B. Market rate composite C. Slotting D. Pay policy

4. What is usually located in an HRIS? A. Information related to individual employees B. Information related to groups of employees C. Spreadsheet applications useful for gathering and sorting information

5. How do you measure the market for high-demand jobs? A. Focus on broadly defined job roles B. Focus on individual employees with specific skills C. Focus on internal value to the organization.

6. As a general rule, salary survey information is expected to reflect the marketplace within plus or minus of what percent?

A. 20% B. 10% C. 5%

ANSWERS: 1. B, 2. B, 3. C, 4. A, 5. B, 6. B

These Test Your Knowledge questions provide a small sample of the information covered in the following courses; Certified Compensation Professional (CCP) & Global Remuneration Professional (GRP) offered by WorkatWork.org. What are your thoughts on how these certifications can sharpen your tool kit of knowledge? What is the best Compensation certification to have in your took kit? Are you game for more quizzes like this?

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