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COMPARABLES – Determining & Defending Them

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  1. COMPARABLES – Determining & Defending Them Presentation for 2014 FPELRA Conference Jeffrey Ling, PhD Evergreen Solutions, LLC jeff@consultevergreen.com

  2. Our Discussion • Who are your comparables and do they vary by classification? • What data do you need from your comparable organizations? • What are the best methods for analyzing comparable data? • How do you present the data? • How do you defend your work during negotiations?

  3. Who are your comparables and do they vary by classification?

  4. Comparables • Comparables are about: • Marketplaces: where you go to “purchase” labor from • Competitors: who enters the same marketplace you do • Competition: how active are others in the marketplace • Market rate: what rates they are willing to pay.

  5. Marketplaces • the markets where workers compete for jobs and employers compete for workers. • Marketplaces are based on: • Supply – who is available? • Demand – who is needed? • Expectation of each – what does the future hold for supply and demand?

  6. Supply and Demand • Price or wage is dictated by supply and demand. • A change in either can cause a change in price.

  7. Key Concern: Increasing Demand • A shift in demand in the market raises the price. • Demand typically increases in a strong economy.

  8. Competitors • Competitors are those who buy where you do and seek the same product. • There is a hierarchy in the marketplace that translates to the equivalent of “branding.” • Different jobs, job families, and functions can have different competitors.

  9. Competition • Your strategy, resources, and needs as well as these characteristics of your peers define your market position. • Competition is not uniform across jobs or job families. • Competition varies over time.

  10. Key Elements • Define the Relative Market by job family. • Define Key Competitors by job family. • Determine the market trend by job family. • Know your compensation philosophy or desired relative market placement.

  11. What data do you need from your comparable organizations?

  12. Data • “Garbage in is garbage out.” • Data can provide any answer you want. • Following convention rules protect you.

  13. What Do You Need? • Type of structure • Ranges (min, mid, max) • Actuals (average, median) • Variation (standard deviation) • Anticipated changes (percentage to actual and range) • Employee count (FTE) • Match quality (rating) • Turnover (percentage)

  14. What are the best methods for analyzing comparable data?

  15. Analysis • Easy to understand, interpret, and repeat. • Mix of numbers and graphics. • Generally accepted methods and tools. • Factor in the quality of the matches and sufficiency of data.

  16. How do you present the data?

  17. Reporting • Comparison of ranges and actuals with variation. • Power of the midpoint. • Impact on the relative market of respondents. • Comparison of market response (turnover). • Quality of the comparison.

  18. How do you defend your work during negotiations?

  19. Defense • Understand that agendas come into play. • Know the other side and their desired position. • Know the market fully – more is always more. • Identify your philosophy and your parameters.

  20. Thank you Jeffrey Ling, PhD Evergreen Solutions, LLC 2878 Remington Green Circle, S101 Tallahassee, FL 32308 850-284-2731 jeff@consultevergreen.com