Creating Contextual Posting Ranges

In a competitive labor market, recruiting and retaining talent is critical to the success of any organization. Compensation professionals are experts at using surveys to price their jobs and to create structures with meaningful ranges by grade. By leveraging relevant market information from HR reported data, comp professionals can create and maintain a validated and competitive framework to provide strategic guidance around how to best compensate employees.

The ‘traditional’ approach to structures

The process of leveraging, or creating, a compensation framework begins with matching internal company jobs to survey jobs and collecting the market reference points from a competitively relevant scope. From there, the priced job is either assigned to the grade with the most relevant midpoint and range based on the market data or assigned to a specific range associated with that job.    

When new survey data results are published, job pricings and structures are both updated to account for the overall market movement. Because the ranges are created and updated based on trusted salary survey data, HR professionals and business leaders know that they can trust the established framework for guiding employee pay. Organizations can rely on their internal structures to make the right compensation decisions to pay their employees and support overall business goals.

So, what’s the problem?

While ranges associated with grades within a salary structure are meant to act as a framework for paying employees in a job, they are not designed to specifically address a starting rate of pay for a new employee in the role.      

Furthermore, while many organizations rely on the market data to guide their compensation decisions, this is based on an understanding that survey data represents a point in time and is often published just once a year. Because of this cadence, salary survey data is good for building structures and understanding the general trends related to the overall cost of labor, but it does not always reflect the context of the current market. Survey data is aged to account for market movement. However, aging survey data is based on estimated market changes and often misses more timely changes and trends in the ever-evolving labor market. Because of these factors, the salary range associated with a job does not always represent a competitive and contextual hiring range that should be included in a job posting.

Time for a change

The good news is that with cultural and legislative changes pushing towards greater pay transparency, compensation professionals have access to meaningful insights around real-time compensation data trends.      

Thought leaders in compensation are now able to leverage current market insights based on aggregated job posting data to better understand timely contexts in the employment market. This type of data can be used in conjunction with existing compensation frameworks to provide a contextual market backdrop that will allow comp professionals to better determine the actual range an organization should use to attract the right candidates. Market insights like these provide crucial information to use when including a good faith range in job postings and to make a competitive job offer to the best fitting candidate based on what that individual brings to the table.

Let’s use an example
 
Company A  uses broadbands internally and the range for analysts is: $85,000 – $130,000. They need to hire externally for a new Compensation Analyst. Survey data provides the average pay at a national level across percentiles.

Company A   has determined that their internal needs require them to find an external candidate and local legislation requires them to include a good-faith salary range when they post for the role. To better understand what range to post to attract the right candidate, the compensation pro can leverage some of the data trends available in job posting activity.

By analyzing posting trend data, Company A  can see the demand for this role – represented by companies posting - is rising. Further, seeing that the rates at which skilled compensation analysts are leaving their jobs has consistently been decreasing at a similar rate that compensation analysts are starting new jobs implies that the supply of qualified comp analysts who are open to starting a new job is low right now.

The posting trends provide Company A  with the insight to understand that the competition for a skilled comp analyst is relatively high right now as demand is high and supply is low. Based on that, even when hiring someone who is new to a compensation analyst role, the hiring/posting range needs to be competitive to ensure the right talent is hired as quickly as possible. The decided range to post is $100,000 - $120,000.    

Understanding the current market context around a benchmark job, including measures like overall demand and trends around posted salary ranges, along with traditional survey data provides a competitive advantage especially for attracting the right talent. At Greatpoint HR, we specialize in providing this contextualized compensation data to ensure you are attracting and retaining the best talent for your organization.

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