COMPENSATION MANAGEMENT – Internal Job Valuing and External Market Salary Comparisons

An informative article written by Fred Hilling, President of Sander Consulting Services was published in the 2nd Quarter 2015 WorldatWork Journal. The article was titled, “Salary Pay Options for Control and Accuracy”. Mr. Hilling makes a case in this article based on two primary statements:

1) “The only relevant goal for a salary administrator is to define and administer a competitive salary level for each position.”

2) “The level of support for managers making pay decisions varies by the level of control embedded in the salary policy and accuracy of the prediction of a competitive pay level for an individual position.”

Mr. Hilling continues his position in this article by listing compensation management policies that provide control and accuracy. They include:

  • The definition of job content
  • The method of establishing internal equity
  • The definition of salary grades and ranges
  • The procedure for progression in the salary range

Mr. Hilling makes a case for accuracy based on the methods that support internal job valuing that are aligned or validated by external salary market comparisons.   He describes various methods for internal job valuing which include Classification, Point-Factor Equity Plans, Point-Factor Competitive Plans, Regression Models, and Salary Market Comparisons.

We support Mr. Hilling’s position for greater compensation management accuracy by utilizing an internal job valuing process and an external market pay comparative analysis to validate the internal job placement in the salary structure and to ensure pay competitiveness with the defined salary market.

Mr. Hilling concludes the article with several statements that summarize his position on compensation management with pay options for control and accuracy. One of the statements that resonate with our compensation management philosophy follows: “Salary administrators have a fiduciary responsibility to shareholders/taxpayers. They have to balance this obligation with the continuing advice and opinions from management and employees. The best way to achieve this balance is to implement accurate measurement of competitive pay levels.”

The compensation management team at DBSquared has developed an automated and integrated internal job valuing (internal) and market salary analysis (external) system. We focus on simplifying Human Resources and Compensation Management processes through proven systems and technology.

Please contact us for help with automating your job descriptions, job valuing, market salary analysis and compensation management processes and structures.