Funny Market Pricing Stories

Posted on November 10, 2011 by Chris Kelley Posted in KnowledgePay

Funny how? Ha-ha funny, or funny like a clown. Well neither really. These are just a few of the quirky, humorous situations I’ve stumbled across. Would love to hear your stories.

Towers’ Data Always Runs High – I’ve actually heard this one on several occasions. My response is always, “Really? Do they have bigger calculators or something?” I think not. It’s better to look at the participant lists and see if there’s a driving force behind why there may be data differences between survey vendors for the same benchmark job. Towers Watson does have a very high percentage of large companies and better representation amongst a few of the higher paying industry groups which offers a better rationalization for why their data might be higher. But what if, just maybe, that is the relevant labor market where you compete for talent. Conversely, what if you’re a smaller firm in a notoriously low paying labor market? You would likely be looking to compare to a different set of participating companies. The real story here is make sure you select the survey vendors that are the best reflection of the labor pool where you swim and don’t just knee-jerk react to some off-handed comment that one vendor “runs high”.

Susie is paid at the 75th Percentile? I knew she was overpaid! – Not so fast. While most companies do set their overall pay philosophy to be competitive at the market median, just because one person is paid at, or even above, the 75th percentile doesn’t mean they’re overpaid. In fact, one could argue that perhaps Susie is the only one in the bunch who is under paid. Each organization has to establish their own point of view about what drives individual pay decisions, but usually it can be distilled down to three factors: sustained performance, scope of the individual’s role, and potential for moving to higher levels.

Can your software handle up to 15 market matches for a job? – Well, actually, KnowledgePay can handle an unlimited number of market matches. But that’s not the point. You seriously gotta ask just how many market matches does it really take to figure out a market composite? There is no right or wrong answer. Some organizations firmly believe that having one single market match from a high quality survey is all that is needed. Other organizations will look to have two or three matches assigned on the belief that a larger sampling of surveys will yield a more reliable output. Which approach you take will boil down to philosophical choice, but seriously, fifteen?

So what’s your favorite funny or quirky story involving market pricing?