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Survey Comparables

Survey Comparables. Survey Comparables & Proposal Costing Presented to NPELRA March 29, 2004 Bruce G. Lawson, CCP Fox Lawson & Associates LLC (602) 840-1070. Market Position. Considerations in obtaining data Alternative survey analysis methods Sources of data Conducting custom surveys

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Survey Comparables

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  1. Survey Comparables Survey Comparables & Proposal Costing Presented to NPELRA March 29, 2004 Bruce G. Lawson, CCP Fox Lawson & Associates LLC (602) 840-1070

  2. Market Position • Considerations in obtaining data • Alternative survey analysis methods • Sources of data • Conducting custom surveys • Survey data analysis

  3. Reasons for Obtaining Data • Pricing jobs • Trend analysis • Pay practices • Special Purposes

  4. Alternatives • Purchased surveys • Participate in sponsored surveys • Custom third party surveys • Conduct your own custom survey

  5. Decision Factors • Cost • Time • Reliability • Confidentiality • Availability

  6. The Labor Market • Local • Regional • National • Industry • Function • Size • Varies by level/job type

  7. Conducting Surveys • Select benchmark jobs • Select organizations to be surveyed• Type• Size• Number • Gather, review and verify information • Analyze data and build model structure(s) • Report results to participants

  8. Selecting Benchmark Jobs • Jobs should be matchable (Police Officer, Fire Fighter) • Jobs should reflect large numbers of employees within the organization when possible • Jobs should reflect a cross section of occupational groups or job families • Jobs should cover all hierarchical levels within the the group of jobs under study • Job should be clearly defined

  9. Collecting Benchmark Data • Data collection instrument should contain benchmark summaries for participants to reference in matching their positions to benchmark jobs • Summaries should contain pertinent information and be concise • Level of job • Title of who the job reports to • Title(s) of who the job supervises, if applicable • One sentence duty statements reflecting job content • Education and experience requirements

  10. How Many Surveys • Purpose of the survey• Determine structural pay practice• Price specific jobs/functions • Organizational culture• Market competitiveness• Internal relationships • Type of jobs• Benchmark or non-benchmark • Reliability of data

  11. Survey Participants • Organizations that compete with your organization for employees (recruit from, lose to, or directly compete for the same talent pool) • Employers that reflect the general labor market(s) in which you compete for personnel

  12. Participant Guidelines • No less than 50% of the size of your organization • No more than 200% of the size of your organization • Organizations that serve similar populations (both in terms of size and community character) • Organizations that have similar economic bases

  13. Survey Participation • Number of participants will depend on the number of labor markets and the number of jobs being surveyed • Who are your competitors • Consideration should be given to number of potential non-respondents • Expect 50-70% participation rate

  14. Survey Participation • Minimum of 10 participants, although all jobs may not have 10 data points • Under recent legal developments of Sherman Antitrust Act, at least 5 matches per benchmark are required for sufficient data to draw conclusions • Survey output should be aggregated rather than showing individual organization data

  15. Review of Data • Review job match information • guidelines for matching job content is 70% (variation in duties will always exist, but if 70% or more of the job content is similar, the match is considered a good match) • two different titles should not be matched to one benchmark job, this produces unreliable results

  16. Review of Data • Review job match information (cont’d) • some practice applying a job-specific “adjustment” factor to increase or decrease market data based on perceived degree of match -- this should be used with discretion as it is subjective and cannot be factually defended • data can be “weighted” by organization if it is felt that the match is significantly better from one source than another

  17. Review of Data • Follow-up with participants on questionable matches or data, ask for their job description • Look at titles, number of incumbents in job and salary rates reported for reasonableness • Perform statistical analysis to determine ‘red flags’ in data reported (outlier analysis, t-test)

  18. Analysis of Data • Statistical measures• Average (unweighted or weighted)• Place in market• Percentile (25th, 50th, 75th) • Updating or trending data to current timeline • Adjustments for geographic differences • Your position versus the market• Job to job• Jobs by grade (Internal Equity) • Structure to structure • • Overall trend comparison

  19. Analysis of Data • Regression Analysis• Line of best fit by job family or whole structure • Predicts market pay rate corresponding to job evaluation level• Produces two values which are utilized in equation to calculate predicted pay rate, given a job evaluation rating

  20. Analysis of Data • Regression Analysis • By plugging-in any job evaluation rating into the equation, the predicted pay for that level can be determined • Pay rate = (job evaluation rating times the x-coefficient value) + constant value • This predicted pay rate then becomes the anchor-point for new salary structure (i.e., midpoint of structure)

  21. Valuing the Package • Determine elements of total compensation • Base pay • Variable pay • Benefits

  22. Base Pay • The results of the compensation survey will generally provide a baseline amount or percentage that you are off the market. • Determine whether you are making offer based on average off the market or on a job by job basis • Cost base pay adjustment by applying to current employee population data file

  23. Variable Pay • Determine what is included in the variable pay component of the contract including: - Skill based pay - Educational incentives - Shift differentials - Labor market premiums - Performance pay - Bonuses - Longevity

  24. Variable Pay • Cost out any anticipated increases in the variable pay components • Total the costs for variable pay • Calculate a percentage of total payroll based on the total dollars being spent

  25. Benefits • Determine which benefits are to be included in the total compensation mix. Typically, they will include: • Pay for time not worked (vacation, sick leave, holidays, bereavement leave, jury duty) • Insured benefits (medical, dental, life, disability) • Employer paid retirement contributions • Legally required payments (Social Security) • Other cash payments available to all employees

  26. Benefits • For insured benefits, total the premiums paid for all coverages and calculate a percentage of payroll for these benefits • Pay for time not worked is more difficult • Total the number of days available to all employees and multiply that by the hourly rate of the applicable employee (this can be a significant effort if you have a large number of employees) • Add the amounts for all employees together to determine a total cost. Divide total by total payroll to calculate a percentage of payroll.

  27. Determine Offer Value • Total the dollar amounts for each of the three components (base pay, variable pay, and benefits) • Divide that total by total payroll • The result is the percentage cost

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