Market Pricing
Organizations seek to offer market based
pay rates in order to attract and retain
competent employees
There are two basic methods to recognize
market wage rates:

Pure market pricing

Guideline market pricing method
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Market Pricing
Pure Market Pricing Pay Survey

The organization develops brief narratives that
describe job activities and incumbent
requirements.

The organization conducts pay rate survey of
other organizations having employees who
perform same work assignments in the same
labor market.

Each position assigned pay rate based on market

This is the least costly method....It is easy to
explain..…and judicially defensible.
2
Market Pricing
Market Pricing Guideline Method
The Evergreen Approach
This approach permits the influences of internal
equity to interact with existing market rates when
determining the rate of pay for jobs of an
organization.
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Market Pricing
Market Pricing Guide Line Method Steps
STEP ONE:
Establish a Guideline Scale (salary
structure) with salary ranges that
includes a series of salary grades and
a minimum, mid-point, and maximum
rate of pay for each using a 5% to
10% mid-point differential.
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Market Pricing
STEP TWO:
• Develop realistic job descriptions that
include job scope data
• Identify benchmark jobs (40 to 60 jobs)
Example: WA State uses 84 jobs as
market pricing benchmark positions in
setting the classified pay structure
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Market Pricing
STEP THREE:
• Use comprehensive market pricing
surveys when matching benchmark
jobs to other comparable employers
jobs
• Define new pay rates and salary
structure based market pricing
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Market Pricing Tools




College and University Professional Association
(CUPA) surveys.
Milliman Management & Professional Salary Survey
Salary data-on-demand software products including
CUPA & Economic Research Institute
WA Employment Service/BLS Salary surveys
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Why Five Salary Survey Tools
The five salary surveys allow us to market price almost all of
the exempt staff positions (146) and thus determine market
pay levels for 80% of the exempt positions.
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•
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The CUPA HR surveys allow us to select regional and
national peer (enrollment level, public undergraduate)
institutions for individual job pricing and determination of
competitive salary range for exempt administrative and
professional positions.
ERI’s Salary Assessor allows market pricing of exempt
position salary rates in higher education and in the Olympia
labor market area.
The Milliman Salary Survey gives us a market pay comparison
of our professional and managerial salary levels with those in
the Northwest (Washington, Oregon & Idaho).
The Washington State Employment Security Department and
the USDOL Bureau Labor Statistics conduct annual salary
surveys by occupation on a statewide basis.
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Advantages of Market Pricing Surveys
The advantages of professional salary
surveys are:
• Lower cost
• Large number of jobs and organizations
• Focus on specific labor markets/industry
• Conducted by professional research group
• Consistency of survey from year to year
• Survey market at same time each year
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Market Pricing
Advantages
Advantages Include:




Measure college pay rates against the pay rates
of similar organizations & markets.
Selects benchmark positions by level from
across the college for market pricing.
Ensures pay structure based on external market
pay rates for equivalent positions.
Allows update of salary structure using initial
benchmark positions
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Determinants of Pay Structures and Rates

Job Evaluation
 Scope & Level of Job Responsibility
Skill & Ability
 Supervision
 Qualifications

Determines Pay and Rate/Range for Position
 Market Pay Rate & Range

Specific Occupation by Geographic Area Market
 Pay Rate & Range
 Specific Occupation by Industry
 Higher Education Institutions
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ESTABLISHING MARKET PAY STRUCTURE

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

Identify benchmark jobs
Define recruiting/labor marketing
Determine going market rates ($)
Structure midpoint line
Pay grades range – min & max
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Recruiting Market is Market Pricing Focus

Recruiting Market for Evergreen
Exempt Applicants for Washington State 2005 - 2007
2 8 5 -Ot h e r Ap p l i c a n t s
f r om c itie s unde r 10
a pplic a tions
7 2 5 -Ol y mp i a Ar e a
Olympia 584
2 5 2 -Ot h e r Ap p l i c a n t s
La c e y
f r o m c i t i e s wh e r e o v e r 1 0
90
Tumwa t e r 47
a p p l i c a t i o n s we r e s u b mi t t e d
5 6 -Sh e l t o n
1 0 5 -Se a t t l e
1 4 7 -T a c o ma
W a s hi ng t o n T o t a l A p p l i c a t i o ns 15 7 0
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Recruiting Market is Market Pricing Focus
Recruiting Market for Evergreen
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Developing College’s exempt salary structure

Select 40 to 50 benchmark positions to set up salary
structure

Review survey data and establish market rate for
benchmark positions

Plot college exempt salary pay line and compare to
market pay line

Select overall market pay goal (50th percentile) for
exempt pay program
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Developing College’s exempt salary structure





Determine the number salary grades and salary grade
midpoints
Set up structure by determining midpoint to midpoint
differences
Determine salary grade range spread by setting
minimums and maximums
Market price rates on non-benchmark positions (146
of 181) 80%
Complete exempt salary structure and slot all
positions into a salary grade based on market pricing
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Evergreen Exempt Staff Market Pay Goal

Use market survey pay data to set pay goal for
exempt staff salary program

Exempt staff pay goal is 50th percentile overall

Exempt staff pay (on average) is currently at 47th
percentile
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Evergreen Compensation Factors
Major Compensations Factors Include:
• Scope of Responsibility - appraises the position’s breath
and depth of either administrative or managerial influence.
• Supervision - appraises the number (head count & FTE)
and responsibility level of the employees.
• Accountability - appraises the position's accountability for
the allocations of resources and program results.
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Evergreen Compensation Factors
Major Compensations Factors Include:
• Communication skills - is the appraisal of the position’s requirement
for proficiency in interpersonal, oral and written skills.
• Professional Capability Requirements - appraises minimum
Knowledge, Skill & Ability (KSA’s); education; experience and training
necessary to perform the job.
• Creative Professional Performance - Focusing on primary duties,
appraises the position’s involvement with work activities requiring
problem solving, invention, imagination, originality or talent in a
recognized professional field.
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