Looking to Benchmark Pay?
Salary Level
Establishing a geographic salary structure requires an examination of the:
- organization's salary levels
- organization's salary structure
- AND
- salaries levels of a branch office
| Salary level | The average salary paid to a group of employees. |
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We're trying to compare two locations: headquarters and a branch office. Look at the average salaries paid in each location. This comparison determines whether a branch-office salary structure is required.
Salary-level information can be obtained from salary surveys. ERI's Geographic Assessor®, for example, provides salary differentials between any two of 7,000 areas in North America. This software shows percent differences between pay levels of multiple cities. You can use these percentages to determine if the city selected for the branch office has lower or higher pay levels than the headquarters city.
Pay Policy Line Approach
There are a number of steps used in the development of a salary structure (as described in DLC Course 82). A short review may help you to understand how to adapt the headquarters structure to the other geographic locations.
The first step in designing a salary structure is to develop a pay-policy line.
| Pay-policy line |
A graph with:
Benchmark jobs are plotted on this graph and a line is drawn according to the plotted points, as shown below. |
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Valuing benchmark jobs
Once you have a pay-policy line for headquarters, you can compare the pay for benchmark jobs for each grade level to the labor market pay scale of the geographic location.
| Benchmark Job | A job that is commonly found in the organization and the general labor market. Because pay data for these jobs are readily available in published surveys, they are used to make pay comparisons. |
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For example, ERI's Salary Assessor® can be used to compare the internal pay rates of benchmark jobs with their market midpoint using the given market index ratio. This tool shows you the difference between the actual midpoint pay of a benchmark job and the market midpoint. This percentage ratio can be used to adjust the pay policy line to keep it consistent with the organization’s pay policy.
Memory Jogger
The salary level of the branch-office location is used to: