CHAPTER 10
SURVEYING MARKET PAY AND COMPENSATION PRACTICES
What is the “market” or “going rate” for a particular job or jobs that may be considered
benchmark jobs? Before most organizations establish rates of pay for their jobs or develop a pay
structure, they want to know what equivalent jobs are being paid in the marketplace. Market information
on job pay is commonly known as externally competitive conditions. Private enterprise and economic
theorists thrive on the term “market.” For the compensation manager, the market is frequently a most
difficult and illusive concept to identify and precisely define. Those responsible for setting pay want to
know what others are paying for similar kinds of work. The problem begins with identifying similar
kinds of work, becomes more complex in determining just who their competitors are in the marketplace,
and further continues in interpreting just what the survey data means to those having pay design
responsibilities.
Conducting a good survey—that is, one that provides valid data in useful form and is current—
requires considerable effort. It requires the efforts of those conducting the survey and those responding to
it. Designing a useful survey requires certain knowledge and skills; influencing others to respond with
accurate and useful data requires an additional set of knowledge and skills.
KEY CONCEPTS:
2. Scope of a survey.
4. Conducting your own survey.
SIGNIFICANT POINTS OF INTEREST
1. An organization implements a compensation survey to determine how the various
3. Most businesses feel that it is critical to know what competitive compensation practices are
4. Conducting a useful and worthwhile compensation survey requires a considerable
expenditure of time by those implementing the survey and those responding to it.
6. Designers of pay surveys realize that the collection of average pay data is insufficient.
7. Surveys may be conducted over the telephone, by mail, and through personal contact.
8. The federal government and some major private concerns conduct and offer some of the
most widely-used surveys.
9. Surveys conducted by third parties (canned surveys) have some strengths and weaknesses,
10. When conducting a survey in which the respondents will receive the results, each respondent
11. Many organizations are available to design and conduct surveys on a fee basis for any
organization wishing to collect specific kinds of compensation information.