In a BLR webinar titled "Compensation: Implementing an Effective Market Pricing Methodology," Chris Kelley, founder and CEO of KnowledgePay, Inc., offered advice to employers on implementing a market pricing methodology for determining salaries.
A market pricing strategy must have a clear connection to an employer's overall business strategy. For example, a company's general business strategy might be to grow through innovation in products and services. In order to accomplish this, the company might adopt a human capital strategy to attract, retain, and engage high-performing, leading edge talent. Within that strategy, the company might create a compensation strategy to devise reward programs that are competitive and attach incentives to innovation.
Once the pricing methodology has been integrated into the business's overall business strategy, the company must avoid the classic mistake of "Ready, fire, aim!" Before implementing policy changes, companies should articulate the following:
- What data sources are available?
- What data elements will the employer consider in its pricing methodology?
- How will data be managed?
- How will the strategy be communicated and disseminated?
- What decision guidelines will form the basis for action?
- How will the employer incorporate trending?
Once these items have been articulated, the company is ready to compose a market pricing strategy.
Chris Kelley is the founder and CEO of KnowledgePay, Inc. He has more than 20 years of experience working in corporate Human Resources/Compensation, and has led one of the largest implementations of market pricing in the U.S. He also serves as adjunct faculty for WorldatWork, and has been teaching Market Pricing since 2005. Visit his company's website at www.knowledgepay.com.