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