MARKET COMPETITIVENESS

Market Competitiveness

Market Competitiveness

Each employee in an organization is paid a salary. Salaries vary greatly, with executives earning as much as (or greater than) 100 times an entry-level employee's salary. This variation is not by chance. It is rationally established through a salary structure - a hierarchy of salaries. (Kelly 2001)

Organizations develop this structure based upon internal factors (such as current rates, job relationships, and custom) and external factors (such as labor markets and laws). Salary structures integrate these factors to create a hierarchy, in which every job of the organization has its place.

Before establishing a salary structure, you must first have a job structure: a hierarchy of your organization's jobs based upon their value to the company.

Market Rates

Most often, however, the job structure is priced out through the use of market rates. This means the employment of salary surveys. (See DLC Course 73: Analyzing Salary Surveys for information on wage surveys.) One such source of salary survey data isSalariesReview.com, which provides median pay data for 4,000 positions in 6,000 cities worldwide. Market rates are the source for determining the minimum you should pay. Candidates expectations are based upon the market, so you need to be aware of what the competition offers. You will first need to have a job description handy(Nadler 1984). Basing the market on title alone leaves lots of room for negotiation. For example, a marketing director can earn anywhere from $50,000 to $500,000 a year. Break the job down and be specific about the responsibilities it entails.

There are a number of sources available to determine the market value of the job you are offering. Call your local chamber of commerce and ask about similar jobs in the area. Read the local classifieds to see what others seeking employees are offering.

The organization's strategy toward the labor market ...