Hi,
Compensation surveys are conducted for benchmarking the salary levels of the organization in the industry. Points to note while conducting the surveys:
Creating a compensation philosophy:
- Where does the organization position itself in the industry (e.g., 70th percentile of the market)? This means the salary levels for the organization will fall under the 70th percentile of the market salary.
Benchmarking:
Conducting benchmarking with the industry will not be an appropriate option where there is much diversity. Proper measures need to be ensured while planning the benchmarking exercise:
- Identifying the peers in the industry.
- Organizations to whom we lose the people.
Benchmarking should be done with the following points in mind (not exhaustive):
- Industry.
- Nature of business (product/service, etc.).
- Headcount.
- Volume of business.
- Operating geographies.
- Skill sets and special competencies.
It is unfair for a 100-people product development organization to benchmark itself with Infosys. This will yield no desired results. We might end up understanding the market price, but the affordability issue creeps in, which does require consideration while designing the salary structure.
Measuring parameters:
- Guaranteed cash components (basic, HRA, allowances, cash, etc.).
- Fixed pay.
- Variable pay.
- Benefits (details - insurance, hard furnishings, loans, education, etc.).
This needs to be carried out for all roles/levels corresponding to the market structure.
Comparative Analysis:
- Minimum salary offered for roles/levels.
- Median salary.
- Maximum salary.
- Market percentiles at varied levels - 60, 70, 80, etc.
Compare your organization's salary level at the 70th percentile (as per our example) and make appropriate changes in the salary structure.
It is very difficult to obtain salary details for all companies planned to be benchmarked against. Hence, a better option would be to use a third party such as Hewitt, Mercer, Mafoi, etc., for data capturing and analysis.
The authenticity of data is always questionable since organizations may not be revealing accurate data most often. But a fair comparison can be done.
All the best.
Regards,
Rajesh Balasubramanian
Head - Operations
TiG Global
Bangalore
Email: rb@talent-india.com
Phone: +91 98458 41000