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We will refer again to Table 2 and the use of compa-ratios in Section 5.0, Aligning Company Policy with the Market, in connection with salary reviews. First, however, we must identify where our sample company's salaries stand relative to the market. This will help determine the magnitude of the salary review required to maintain the preferred position in the market, taking into account any performance-based salary movement for individuals.

3.0 Modeling the Market's Salary Policy.

The first step is to distill the market data into a model compatible with the analysis carried out for the company. Therefore, in a manner similar to that carried out for the company, as shown in Chart 1, we start by plotting the market data. The market data are obtained through job-evaluated salary surveys.

Chart 3

As with the company data, the next step is to determine practice lines for the market data. The market data practice lines are determined in a slightly different manner to company lines. This is because we want to determine the median position in the market data, as opposed to the line of best fit as is done for the company data. (This difference is merely a mathematical nicety to enable market practice lines other than the median to be calculated.)

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