As the economy rebounds, your top performers will be faced with new opportunities and your top candidates will have many offers. Reliable data on pay levels is foundational to your ability to attract and retain talent. Are you effectively pricing key positions in your organization? To ensure competitive pay levels, it is important to market price properly. Join us as IBM’s Kim Taylor, director of compensation, discusses the fundamentals of building and using market data effectively. Topics covered in this session include: An introduction to market pricing. The 10 steps to successful market pricing. Determining fair pay. Why we need to use surveys. Effective job matching.

1. #WFwebinar
Speaker: Kim Taylor, CCP, GRP
Director of Compensation
IBM
Moderator: Frank Kalman
Senior Editor
Workforce magazine
Market Pricing Basics

2. #WFwebinar
Tools You Can Use
Audio Control
– A dial in number will not be provided.
– The audio will come through your
computer speakers or headphones.
– Check the internal volume on your
computer, external speakers or
headsets.

3. #WFwebinar
Question & Answer
– Click the question icon on the
floating toolbar in the bottom right
corner.
– Type your question in the space
at the bottom.
– Click “Send.”
Tools You Can Use

4. #WFwebinar
Tools You Can Use
• Polling
– Polling question will
appear in the
“Polling” panel.
– Select your response
and click on
“Submit.”

5. #WFwebinar
Frequently Asked Questions
1. May I receive a copy of the slides?
YES! You will receive a link to today’s recording, along with
a link to download the slides shortly after the
presentation concludes.
2. May I review the webinar recording at a later time?
YES! You may log in again. A link that will be provided in an
email after the event to review the presentation on-
demand.

6. #WFwebinar
Frank Kalman
Senior Editor
Workforce magazine
Market Pricing Basics

7. #WFwebinar
Kim Taylor, CCP, GRP
Director of Compensation
IBM
Market Pricing Basics

8. © 2014 IBM Corporation
Market Pricing Basics
Kimberly Taylor – Program Manager, Compensation and Data Operations

9. © 2014 IBM Corporation
Agenda
Overview of market pricing
Market pricing – ten steps
Consumers’ guide to salary surveys
Combining data from several surveys
Questions
9
Market Pricing Basics

10. © 2014 IBM Corporation
Overview of market pricing
 What is it?
- Formal process for determining the external value of jobs
 What is it used for?
- Establishing wage and salary structures and pay rates that are
market sensitive
- Tracking movement of the market over time
- Providing a logic check for internal equity
- Establishing fair and objective rates of pay that can be applied across
the organization
10
Market Pricing Basics

11. © 2014 IBM Corporation
Determining relative value
Job Analysis
Job Evaluation
Job Documentation
Market Data Emphasis Job Content Emphasis
Data Collection
and Analysis
Job Content
Evaluation
Data Collection
and Analysis
Job Content
Evaluation
Reconciliation of internal and
External Considerations
Job Worth Hierarchy
Base Pay Structure
Source: WorldatWork
11
Market Pricing Basics

12. © 2014 IBM Corporation
Overview of market pricing
Market Spectrum
Market Aware Market Focused Market Driven
Internal focus Internal/external focus External focus
Reactive use of market data Evolving use of market data Proactive use of market data
Set of benchmarks; constant
survey portfolio
Periodic review of benchmarks
and surveys
Regular review/assessment of
benchmarks and surveys
Process "owned" by corporate
compensation
Shared "ownership" between
compensation and line
Shared "ownership" between
compensation and line
Training for corporate
compensation only
Limited management
training/communication
Broad management training
5 - 10 surveys 10 - 25 surveys 25 - 50 surveys
15% to 25% of jobs are
market-priced
30% to 40% of jobs are market-
priced
Over 50% of jobs are market-priced
Adapted from Bentson & Hand: “Getting the Biggest Bang for Your Survey Buck”
12
Market Pricing Basics

13. © 2014 IBM Corporation
Market pricing – 10 steps
1. Analyze your organization’s
jobs
2. Develop brief job
descriptions
3. Identify benchmark jobs
4. Select salary surveys
5. Identify appropriate job
matches
6. Choose appropriate market
scopes and determine market
value
7. Adjust survey data
8. Age survey data
9. Slot non-benchmark jobs
10. Analyze variance
13
Market Pricing Basics

14. © 2014 IBM Corporation
Market pricing – 10 steps
1. Analyze your organization’s jobs to determine:
 Main internal function and responsibilities
 Knowledge/Skills/Abilities required
 Organizational level and reporting relationship(s)
2. Develop a brief job summary
 “Capsule” job descriptions facilitate survey matching
 Avoid writing descriptions with an incumbent or candidate in
mind
14
Market Pricing Basics

15. © 2014 IBM Corporation
Market pricing – 10 steps
3. Identify benchmark jobs
 Common jobs within a recruiting market
 Typically found in many types of organizations (e.g. – accountant)
 Can be industry-based (e.g. nurse)
4. Select survey or surveys
 Geographic-based (e.g. Chicago metro area)
 Functionally-based (e.g. accounting positions)
 Industry-based (e.g. healthcare)
15
Market Pricing Basics

16. © 2014 IBM Corporation
Market pricing – 10 steps
5. Identify appropriate matches between your organization’s jobs and
survey jobs.
 Match jobs based on content, not title
- Don’t match incumbents
 Solicit feedback on your matches
 Match at least 70% of your company job
 Consider combining multiple survey benchmarks to match hybrid
jobs
- Two is ideal, three in certain circumstances
16
Market Pricing Basics

17. © 2014 IBM Corporation
Market pricing – 10 steps
Dos and Don'ts of Job Matching
Do Don't
 Do use all available information
including job descriptions,
organization charts, etc.
 Don't rush this process. It may be
time-consuming, but it's necessary.
 Do price as many levels as
possible within a job family
 Don't assume other organizations
are mirror images of yours.
 Do think creatively. For example,
other organizations might not use
the same titles your organization
uses.
 Don't rely on job title alone during
the matching process -- a recipe for
disaster.
Adapted from Bentson & Hand: “Getting the Biggest Bang for Your Survey Buck”
17
Market Pricing Basics

18. © 2014 IBM Corporation
Market pricing – 10 steps
6. Determine market value at pay points corresponding to:
 The appropriate market scope
 Your organization’s compensation philosophy
- Mean (Average)
• Organization-Weighted
• Employee-Weighted
- Median
- Quartiles
18
Market Pricing Basics

19. © 2014 IBM Corporation
Market pricing – 10 steps
7. Adjust data based on credibility of the source and degree of match
 Weigh survey data
 Premiums and discounts
8. Age the survey data based on organization’s market timing and
methodology
 Lead
 Lag
 Lead/Lag
19
Market Pricing Basics

20. © 2014 IBM Corporation
Market pricing – 10 steps
9. Slot non-benchmark jobs based on comparable worth
 Organization job may fall between two survey jobs or require
knowledge/skills/abilities that are similar to another benchmark job
10. Analyze variance versus current practices
 What is the gap between what your organization currently
pays and where it wants to be in the market?
20
Market Pricing Basics

21. © 2014 IBM Corporation
Consumers’ guide to salary surveys
 Evaluate survey quality
- How old is the survey?
- Who conducted the survey?
- How many organizations/incumbents are represented?
- How often is the survey conducted?
- How stable is the participant base?
- How is the data collected?
• Aggregate method vs. Incumbent method
21
Market Pricing Basics

22. © 2014 IBM Corporation
 Evaluate survey quality (continued)
- Does the survey comply with Safe Harbor Guidelines issued by U.S.
Dept. of Justice & U.S. Federal Trade Commission?
• Survey must be conducted by a third party
• Data must be at least 3 months old
• Each disseminated statistic must have five companies reporting
data
• No individual company’s information represents more than 25% of
each disseminated statistic
22
Consumers’ guide to salary surveys
Market Pricing Basics

23. © 2014 IBM Corporation
 Evaluate survey quality (continued)
- Surveys to avoid:
• Surveys that report data in violation of the “survey safe harbor
guidelines”
• Surveys with wild fluctuation in participation
• Telephone or e-mail surveys conducted among compensation or
HR “friends and colleagues”
• Published surveys that display a page of data for each participant
• Published surveys that display lines of data for each participant
23
Consumers’ guide to salary surveys
Market Pricing Basics

24. © 2014 IBM Corporation
 Evaluate survey relevance
- Does the survey include data on the right jobs?
• Are survey jobs comparable to my organization’s jobs?
- Does the survey include data from the right companies?
• Are survey participants my organization’s true labor competitors?
24
Consumers’ guide to salary surveys
Market Pricing Basics

25. © 2014 IBM Corporation
 Understand survey compensation data elements
- Base Salary
- Bonus/Short-Term Incentive
• Target vs. Actual
- Total Cash Compensation
- Salary Range
• Minimum, Midpoint, Maximum
- Incentive Eligibility
- Long-Term Incentives
• Cash, Stock
25
Consumers’ guide to salary surveys
Market Pricing Basics

26. © 2014 IBM Corporation
Sample survey data
26
Consumers’ guide to salary surveys
Market Pricing Basics

27. © 2014 IBM Corporation
 How many surveys to use?
- Is one enough?
• Robust survey
• Only option
- Does it vary by job?
• Executives
• Rank and file employees
- Is there a such thing as too much data?
27
Consumers’ guide to salary surveys
Market Pricing Basics

28. © 2014 IBM Corporation
Combining data from several surveys
A data example
Data Source 1 Scope Base Salary
Job Title Effective Date Industry Size Location 50th Percentile
Accounting Lead May 1, 2013 All Industries 200-300 FTEs Florida $53.1
Data Source 2 Scope Base Salary
Job Title Effective Date Industry Size Location 50th Percentile
Senior
Accountant January 1, 2014 Mfg Durable 200-300 FTEs Florida $53.9
Composite Base Salary
Job Title Effective Date Aging Factor Premium/Discount Weight 50th Percentile
Accounting Lead May 1, 2013 3% 5% 1 $57.4
Senior
Accountant January 1, 2014 3% 0% 2 $54.4
May 1, 2014 Composite $55.4
28
Market Pricing Basics

29. © 2014 IBM Corporation
What we covered
 What market pricing is and what it can be used for
 10 steps to effective market pricing
 Types of salary surveys available, and how to choose
 Combining data from several surveys
29
Market Pricing Basics

30. #WFwebinar
• Please take this time to submit your Questions.

31. #WFwebinar
Join our next Webinar!
Mobile Learning for a Global
Workforce: Trends, Cases and
Insights
Wednesday, June 18, 2014
Webinars start at 2 p.m. Eastern / 11 a.m. Pacific
Register for all upcoming Workforce Webinars at
www.Workforce.com/webinars