NRC: Job grades, job evaluation, and Jobscore.
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Page 22

4. Using Surveys to Set Salary Levels.

Once a grade structure has been established it is necessary to establish a salary level for each grade. These salary levels would normally be obtained from salary surveys.

The mid-point salary level in each grade in a salary structure is taken as representative of all the jobs in the grade, and is the rate paid to a competent performer in the grade. The market needs to be examined to obtain salary levels appropriate to the jobs in the grade. Information about market salaries can be obtained from industry associations, peers in the industry, Labour organisations and professional associations, Bureaux of Statistics, education institutions (regarding salary levels for graduates), recruitment firms, newspaper job ads, the internet, and consulting firms. The quality of information varies markedly depending on the source. The information presented may be based on matches to standard job descriptions/job titles, or on a job-evaluated basis. In the latter, all jobs whose data is included in the survey are evaluated using a common job evaluation system. This allows a quantitative relationship between job size and salary level to be established.

The data may focus on specific job groups such as those in a particular job family i.e. engineers, or on an industry, or in a geographic region.

If no suitable source of data is available, the organisation can conduct a customised survey specific to its needs. These take time. There is the need to define the jobs to be surveyed, canvass survey participants, collect and verify the data, and analyse and distribute the results to survey participants.

The NRC conducts a number of surveys, both standard, regular productions and customised once-off surveys. Some NRC surveys are general all-industries surveys, and others are specific to a particular industry. Both job description match and job evaluated surveys are conducted.

Based on its job evaluated surveys the NRC publishes sets of figures that relate job size, as measured by Jobscore, to market salaries. These figures can be readily translated into grade mid-point salaries for any Jobscore evaluated grade structure. A range of figures are published at various levels in the market (various percentile and quartile positions) so that an organisation can set their pay structure at their desired position in the market.

For example, consider an organisation that wishes to place its salary structure at the median of a general all-industries market. A single equation provided by the NRC is used to set all grade mid-point salaries. An example of such a formula is expressed as $11,981 plus $154.76 per job point.

If the midpoint job evaluation for a particular grade in the organisation is 384 points then using this formula, the corresponding grade midpoint salary is:

$11,981, plus $154.76 multiplied by 337, which equals $64,135.

[This is the model used in Figure 4, Section 1.3.1 (refer Grade 4 in that Figure).]

Using this formula, the mid-point salary for each grade in the structure can quickly be determined. The maximum and minimum salary for each grade is then calculated from the midpoint as determined by the band width for the grade.

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Copyright 2004 National Remuneration Centre, Melbourne.