Page 191 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)
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Chapter 5. Salary                           177


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                                                 Years
           Figure 5-7. Maturity data

               Note that the maturity data shown has four bands or ranges within the minimum
           and maximum values. These could be used to distinguish between levels of performance on
           the job.

           Market Pricing
           The traditional methods of job evaluation begin with an establishment of job value based on
           some method of internal equity. This hierarchy is then measured in terms of survey data to
           determine the competitive level of pay for comparable positions, in order to establish exter-
           nal equity. The problem is that any attempt to measure items using two different methods
           stands a very good chance of reaching dissimilar conclusions. Invariably, the survey results
           will suggest that several jobs are either overgraded or undergraded by one or more levels
           under the internally oriented job evaluation plan. This places the company in the uncomfort-
           able position of knowingly either underpaying or overpaying certain jobs in relation to the
           market, or overriding the job-evaluation plan based on market results.
               The market-pricing method of job evaluation begins with the labor market as the basis
           for evaluating jobs. Jobs for which no survey data exists are then evaluated by the ranking
           method. For example, as illustrated in Table 5-6, assume the president of the Brucell Division
           is assigned grade 23, the vice president of sales and marketing grade 20, and the plant


                        Grade     Salary Midpoint      Job        Survey Data

                          23         $341,900     Division president  $346,800
                          22          308,700
                          21          278,000
                          20          249,500        VP sales &      251,000
                          19          225,700        marketing
                          18          203,600
                          17          184,800      Plant manager     186,300

           Table 5-6. Market pricing example
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