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Jim, thanks for the post. I sympathetic to your point; I agree overall but I feel is a valuable metric to know nonetheless. So if salary budget surveys are not the answer then what is? I would love a post on what is useful or value added for me to help my business leaders make an informed decision on the salary budget.

Market Index and Pay Policy Line (or Pay Structure) are more important because they are more in tune with absolute reality and determine your relative position against your own objectives. If you know the difference between what the competitive market says and what you pay (Market Index) and how well you maintain your desired position against that market (Policy Line or Pay Structure, such as your degree of external market lead or lag), that will tell you how much you need to budget to either maintain your lead or close your gap.

Knowing the accuracy of your measurement tools and your status against ideal is more important than your rate of change. It's like realizing that the precision of your measurement scale and your actual weight compared to your age/size/sex ideal is more important than how your weight gain or loss percentage compares to the percentage experienced by everyone else in the world. Whether your number is "right" or not depends on YOUR needs and objectives, not those of anyone else.

Of course, top management still will want to know how they compare to others, for defensive purposes if nothing else. But they need to know what it means in context.

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