Cafe Classic: When It Isn't There

Editor's Note:  Classic and practical advice from Chuck Csizmar on pricing jobs in countries where data is scarce or simply unavailable.

I was asked the other day to market price several positions in Nairobi, Kenya, and Chao, Chile. The client was seeking to open field operations sites and wanted to get a sense of the marketplace in which they would be seeking to hire talent. So the project was to ascertain the local competitive marketplace for their positions. What is everyone else paying?

However, in the world of compensation survey sources and available pay data Kenya and Chile are not exactly major players. In fact, one might be hard pressed to uncover reliable information from which to gauge anything remotely like a "marketplace."

What's The Problem?

This is what I explained to the client.

• Commercial surveys are scant: When you're dealing with either a small country, or a third world nation or somewhere you can't find without a map chances are good that readily available survey sources will not be available. That's a research dead end.

• National data is the only show in town: When data is available, in any form, it's usually only for the national average. You can essentially forget about industry slices, or revenue size. What you'll get is national data and have to make the most with it.

• Your "special" jobs are missing: Limited data will condense around benchmark jobs, in an effort to gather up as much information as possible. So unique, industry-specific or even extra career ladder jobs may not be represented.

• Algorithms anyone? Sometimes the anecdotal data that you'll come across won't be based on incumbent data, but projections and formulae. So if job "A" pays "X" and jobs "B" pays "Y", then we project (guess, really) that job "C" must pay "Z." Do you want to fall on your sword defending that rationale?

• Look behind the curtain: Some sources will offer, at a hefty price, what appears to be a thorough per-job analysis that essentially fills out a detailed template form with all sorts of data on the country, including 25th, median and 75th percentile data for a job that you couldn't have found elsewhere. The appearance of precision and thoroughness may be masking a simple algorithm coupled with generic data taken from the internet. Did I mention the big price?

This is bad news, I'm thinking, so how can I help the client anyway? They still need something from which to base their compensation strategies for these remote locations.

What Are You Gonna Do?

Presuming that the client's budget is limited, taking the route of custom surveys or high priced per-job analysis is not likely a solution. Nor is spending thousands of dollars for a single country survey (if available) from one of the major commercial survey houses. Even with that expense the reality of scant data, even when prettied up and blended with reams of extra information, is going to be of limited use. Presuming that the client wants more than a number, but a "good" number.

A few practical suggestions:

• Compensation data can be found, usually through the internet, though it is often self-reported and / or government supplied. So try to gain multiple sources to see if a trend emerges. Avoid relying on a single source.

• When commercial surveys fail you, or your budget won't allow it, look for local staffing sources (i.e. Robert Half, Roberts Walters, etc.) for generic job matches.

• Regional data might be available (i.e., Employers Federation of Europe, Gulf Business Survey [Middle East], etc.), with country-specific breakdowns.

• Take what national data you have and presume that such figures are 5% to 10% higher than secondary locations in the country and 5% to 10% lower than what might be expected in the capital city.

• If the data needs to be aged forward (likely) use country inflation rates to estimate pay growth. A common practice is to the discount the annual inflation rate by ~.5% to 1%.

At this point it is critical that the client is made to understand how this anecdotal information from secondary sources is not a smoking gun, but only a price guide to aid their thinking. Because when more reliable data is simply not available all that you'll be able to provide is a rough guide. From there you can advise how they can use such limited information to develop a useful and practical local strategy.

Chuck Csizmar CCP is the founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad-based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

Creative Commons image,"I Don't Know," by Lourdes Nightingale

Comments

[E, James (Jim) Brennan]

Chuck's Classic about the dearth of reliable competitive market pay data outside of the US, Canada and probably Australia still holds true.

In Great Britain, even the "public" Crown data on broad job family pay is highly restricted, banned from mechanical/electronic duplication and treated like original artifacts from the Vatican Library. Which reminds me that Italy has no pay surveys; but (like many major nations outside the English-speaking world) the government legislates pay, usually in cooperation with (or obedience to) the trade unions.

In many cultures, pay is so tightly regulated that executives demand bribes to reveal the rates they pay, because the slightest discretionary difference constitutes a competitive advantage that could be lost if exposed to rival employers. The "free and (semi-)open marketplace for labor" is an economic conceit fairly restricted to a very few nations. In most of the world, "you're not in Kansas any more."

Still, there is a continual thirst for pay data, no matter how questionable its reliability. I recall learning that one extremely speculative algorithm-driven occupationally-broad but provenance-thin data source was being used by government contractors to pay local truck drivers bearing AK-47s in distant lands. Reason: it was better than nothing. My response was, "if it was producing low numbers, no one would accept it, so I suppose it so greatly exceeds the actual market-clearing rate that everyone grabs for it, hoping that Uncle Sugar never realizes how high it is."

Remember that there is a general tendency to spend public funds generously on overseas wages, because taxes will always be raised to cover any excessive costs.