Part IV of the Compensation Market Data Series is now available!

Manufacturing and production jobs are fairly common in the Lexington area, so no compensation market data series would be complete without manufacturing-related information!

Compensation Market Data part IV

So let’s say you have access to market data – how do you actually use that information to make changes to your current compensation plan?

First, you want to benchmark as many positions as possible (i.e. find data similar to what is above for each position). It is important to note three things, though:

  1. Benchmarking is done based on matching job duties, not the job title.
  2. You are looking for approximately an 80% match of job duties between the benchmark match and your organization’s position.
  3. Not all positions will have benchmarks. When it comes to extremely specialized positions or positions where an employee performs the duties of several positions (especially common in smaller organizations), the data just may not be available. In this case, then, you would look to the jobs within your own organization and see which is most similar to the unmatched position in terms of level of responsibility, value to the organization, difficulty of task, or other factors that make sense for your organization.

Once you have collected all of the data, one of two things will happen. Smaller organizations normally use the data to create pay ranges for each position, creating a standard for how much employees will be paid in certain positions and allowing enough room for an employee to move through the range depending on their experience level, time in the position, and factors such as merit or cost of living increases. Most market data will provide the 10th, 25th, 50th, 75th, and 90th percentile salary data to help you in determining that range.

Pay structures are usually the most appropriate options for larger organizations, organizations who value career pathing, or those who are looking to create a solid foundation because they anticipate growth in the near future. A structure is built by looking at the range of pay throughout the organization (highest paid to lowest paid) and creating a regimented number of grades to accommodate all of the positions. There are formulas related to the spread and step of each grade that keep the grades consistent, but for discussion purposes we will just talk about the highlights of a structure:

  1. Normally the grades are narrower for the entry and lower level employees and wider for the managerial/executive employees.
  2. Since the range of each grade is normally wider than a single position’s range, more than one position can be placed in each grade.
  3. In organizations where visibility and career pathing is valued, structures allow employees to have conversations with their managers about where their current position is, where they can go from there, and where they want to end up.

Next week we’ll deviate from the norm a little by looking at some local cost of living/cost of labor that was recently utilized at an HR meeting, so be sure not to miss it!

As always, you can reach HRG at (859) 514-7724, or send Allison an e-mail at

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