Looking to Benchmark Pay?
Interactive Exercise
Market Data
Ordinarily a pay-for-performance program uses market data simply to determine the amount by which the entire salary structure will be adjusted each year. In this exercise, however, we will show you how to use market data from ERI's Salary Assessor® (SA) to directly determine the appropriate salary for a group of employees that reflects:
- current market rates
- experience level of each employee
- performance level of each employee
Background
Jim Stillwell is a Manager of Research & Development for Central Valley Oil & Gas Exploration, Inc., located in Bakersfield, California. The organization has annual revenue of $500 million. Mr. Stillwell supervises a number of Chemists. Each year the pay rates are reviewed for all employees after the performance review cycle has been completed.
Stacked Ranking
The performance review system at Central Valley Oil & Gas Exploration, Inc., is a stacked ranking system for the technical/professional staff. Each professional is evaluated and placed in a distribution. At the end of the forced distribution each employee is assigned a percentile ranking.
The organization is aggressive in paying market rates for its employees. In addition, the organization values and wishes to reward the experience and performance of the employees. The table below shows the experience, performance level and current base salary for two of Mr. Stillwell's employees. In addition, they are both eligible for a 5% bonus at target.
| Name | Years of Experience | Performance Percentile | Current Base Salary | Current Total Compensation at Target |
|---|---|---|---|---|
| Shirley Cantwell | 12 | 90th | $155,400 | $159,900 |
| Mark Tipton | 8 | 25th | $111,900 | $115,700 |
This interactive exercise will walk you through the process of updating the salaries for these two employees.
Click on the Load Step-by-Step button to begin.