You Requested a Market Base Pay Assessment: What Does It Entail?

When you request a market base pay assessment, you're seeking a comprehensive analysis of how your organization’s compensation stacks up against industry standards and competitors. This process is key for ensuring your compensation strategy is competitive and fair, ultimately helping you attract, motivate, and retain top talent. Here’s a breakdown of what a market base pay assessment typically involves:

1. Defining Objectives and Scope

The first step in conducting a market base pay assessment is clearly defining its objectives and scope. Common goals include ensuring your pay practices are competitive, fair, and aligned with industry standards. The scope often covers:

• Market Positioning: Deciding whether your organization aims to lag, match or lead the market by targeting the 25^th, 50^th or 75^th percentile of market data.
• Job Benchmarking: Identifying roles in the market that are comparable to your organization’s positions.
• Market Data Analysis: Gathering relevant pay data from survey sources.
• Demographic Alignment: Using data that reflects your organization's specific demographic profile such as the organization’s location, annual revenue, industry, and number of fulltime employees.
• Internal Pay Structure Review: Comparing your organization's current pay against the market.

These elements shape the overall strategy of the assessment, ensuring it focuses on relevant areas impacting your organization.

2. Data Collection

A robust data collection process forms the foundation of a market base pay assessment. This involves gathering customizable compensation data from reputable sources, including:

• Compensation Surveys: Industry-specific surveys providing insights into salary ranges, bonuses, and benefits. At Cascade, we use survey sources tailored for both for-profit and non-profit organizations.
• Salary Databases: Third-party databases aggregating compensation information across various sectors.
• Industry Reports: Reports offering insights into compensation trends and benchmarks for specific roles or industries.

The data used is current and relevant to the specific role, geographic location, and industry. A minimum of three survey sources is used, following best practices, to establish a market-based salary range. The more specific and reliable the data, the more accurate the results.

3. Job Matching

Job matching involves comparing internal roles with equivalent roles in the external market. Key factors considered include:

• Job Responsibilities: Ensuring role responsibilities align with the market data.
• Required Skills and Experience: Comparing the required skills and experience levels between the internal role and market data.
• Job Level: Matching the organizational level and seniority of the role with external benchmarks.

This step is critical to the accuracy of the assessment, as mismatched roles can lead to inaccurate pay recommendations.

4. Compensation Analysis

With data in hand, the next step is to analyze the compensation levels, which typically includes:

• Salary Range: Determining the start, midpoint, and maximum of the range based on the averaged market data.
• Pay Structures: Comparing your pay structures with market trends and practices.
• Internal Equity: Assessing pay consistency within your organization to ensure fairness and equity.

Reporting and Recommendations

Once the analysis is complete, a report is generated outlining the findings. This report generally includes:

• Survey Sources: A comprehensive list of all sources utilized for the specific analysis.
• Market Salary Data Analysis: The average of all data points to determine the minimum, midpoint, and maximum of the salary range.
• Market Salary Range: The recommended salary range derived from averaging the data across all survey sources.
• Organization Comparison: An evaluation comparing your organization’s current pay or midpoint to the market midpoint.

A market base pay assessment is an essential tool for ensuring that your compensation practices are both competitive and equitable. By systematically analyzing market data, comparing job roles, and making informed recommendations, you can optimize your compensation strategy to attract and retain top talent. Investing time and resources into this process will significantly enhance your organization’s competitiveness in today’s dynamic job market.

As CEA’s sister association and partner for all compensation requests, Cascade offers comprehensive market base pay assessments, including market base pay plus target bonus assessments for total rewards insights. If you need assistance with any role, contact Cascade’s compensation team today for discounted pricing, exclusive for CEA members.