COMPENSATION RATES

Compensation Rates

Compensation Rates

Part A

Introduction

Compensation is based on so many factors for organizations within different to similar industries that it can be difficult in choosing the most effective and efficient package for employees. In determining compensation organizations must analyze how each position is aligned with business needs and organizational strategy. Outside factors such as competitor matching and market trends also establish the most suitable base pay and benefit package for new and existing employees. Organizations can have an advantage of mirroring competitors or paying above or below the market rate while seeking to control cost. The advantages range depending on company needs therefore, the mix of pay forms come in handy as the business strategy is compared to what each position brings to the company. Competitive compensation is also used to attract and retain skilled and higher competency employees. The most challenging positions are held by those who have a higher competency level plus the skills needed to handle complex issues. While some positions are skill-based, both levels of work offer, depending on the industry, competitive compensation with chance for promotion and job security. Labor markets breakdown the supply and demand of a particular position within an organization and provide the detail a manager may need in relation to total compensation. This paper will discuss job classification in relation to market rates and how competitors approach compensation planning on an internal and external analysis.

Competitor Compensation

The compensation study directly supports the Iowa Promise in that compensation is an important component in our ability to attract and retain the talents of staff members necessary to achieve the strategic goals of the Organization and the various units within it. The “Working at Iowa” survey highlighted the importance of communication on issues important to staff? and the compensation is clearly an important issue for the campus community. (Mosely? Pietri? and Megginson? 2005)

Annually? and more frequently for certain classifications? Human Resources? Office of Compensation? receives and analyzes relevant market data to compare the competitiveness of Organization's salaries against the market. Market surveys determine rates paid by competitors for similar jobs. Organization's goal is to be competitive in the markets in which it competes. How an organization positions its pay in relation to the market is the result of balancing its ability to recruit and retain qualified applicants in relation to the budgetary resources available. As relevant labor market rates fluctuate in response to supply and demand of labor and other economic factors? pay ranges may be adjusted with the appropriate budgetary approval(s).

Internal Competitiveness

As a general philosophy? an organization compares average salaries in the market to its pay range midpoints. The market is defined by the industry(s) and region(s) in which we compete for qualified applicants where warranted. Market adjustments may be recommended for jobs with high turnover or low supply of qualified applicants. Market adjustments are not always applied to all employees in the classifications or job families receiving the adjustments. For example? employees who are high in the range or employees who are low ...