Mastering Market Data Presented to NPELRA April 15, 2002 Bruce G. Lawson, CCP Fox Lawson & Associates LLC (602)

Determining Market Position Considerations in obtaining data Alternative survey analysis methods Sources of data Conducting custom surveys Survey data analysis

Reasons for Obtaining Data Pricing jobs Trend analysis Pay practices Special Purposes

Alternatives Purchased surveys Participate in sponsored surveys Custom third party surveys Conduct your own custom survey

Decision Factors Cost Time Reliability Confidentiality Availability

Definition of the Labor Market Local Regional National Industry Function Size Varies by level/job type

Conducting Surveys Select benchmark jobs Select organizations to be surveyedTypeSizeNumber Gather information Analyze data and build model structure(s) Report results to participants

Selecting Benchmark Jobs Jobs should be matchable (Police Officer, Fire Fighter) Jobs should reflect large numbers of employees within the organization when possible Jobs should reflect a cross section of occupational groups or job families Jobs should cover all hierarchical levels within the the group of jobs under study Job should be clearly defined

How Many Surveys Purpose of the surveyDetermine structural pay practicePrice specific jobs/functions Organizational cultureMarket competitivenessInternal relationships Type of jobsBenchmark or non-benchmark Reliability of data

Survey Participants Organizations that compete with your organization for employees (recruit from and lose to) Employers that reflect the general labor market(s) in which you compete for personnel

Survey Participant Guidelines No less than 50% of the size of your organization No more than 200% of the size of your organization Organizations that serve similar populations (both in terms of size and community character) Organizations that have similar economic bases

Survey Participation Number of participants will depend on the number of labor markets and the number of jobs being surveyed Who are your competitors Consideration should be given to number of potential non-respondents 10 or more actual participants, although all jobs may not have 10 data points

Analysis of Data Statistical measuresAveragePlace in marketPercentile Updating or trending data Your position versus the marketJob to jobJobs by grade (Internal Equity)Overall trend comparison

Analysis of Data Regression AnalysisLine of best fit by job family or whole structure Predicts market pay rate corresponding to job evaluation levelProduces two values which are utilized in equation to calculate predicted pay rate, given a job evaluation rating

Analysis of Data Regression AnalysisBy plugging-in any job evaluation rating into the equation, the predicted pay for that level can be determined Pay rate = (job evaluation rating times the x-coefficient value) + constant value This predicted pay rate then becomes the anchor-point for new salary structure (i.e., midpoint of structure)