The Value of Gauging Competitive Pay Levels

I’ve been in dialogue quite a bit in recent weeks regarding compensation levels related to hiring needs. When an employer seeks external candidates for an open position, having a realistic feel for pay levels in the relevant talent market is helpful. For example, I recently spoke with the director of human resources at a local company about their search for a controller to manage accounting and financial functions and staff. Their desired salary range for this position is $65-75,000. However, based on pay survey data (see below), companies in our area are paying this position salaries ranging from the low to mid $80s to the low $100s. In my professional opinion, hoping to hire a talented person for an important position without being prepared to pay adequately is like trying to buy a new car with a budget better suited for a golf cart.

To help employers set more accurate expectations, we are fortunate to have two very good sources of compensation data for employers in the Michiana-area (southwest Michigan and northern Indiana) region:

• The Michiana Partnership published its 2015 Wages & Benefits Report for the Michiana Region, including employers from a seven-county region. The full report is available free of charge.
• The Economic Development Corp. of Elkhart County (EDC) also does an annual wage and benefit survey. Their survey is very similar in timing and size breakdown to the Michiana Region survey but it only includes Elkhart County, IN, employers. Cost for the full report is $45.

Both of these surveys report data by manufacturing/non-manufacturing; and also by company size, as measured by annual revenues. While there are no “100% correct” answers when it comes to establishing market pay levels, good techniques do exist. Seek out local data like that found in the surveys mentioned above, refer to industry surveys, consult with search firms or professional service firms in the profession for which you are hiring (i.e. Kruggel Lawton if you are seeking a CFO, controller, or other financial manager)

Of course, there are other important factors to managing compensation and rewards in any organization, including:

• The organizational values and culture that shape the relationship between employee and employer
• A strategic approach to total rewards, including cash compensation, paid time off, employee benefits, the work environment, and other elements
• The capability of human resources and/or business and financial management staff to manage this important aspect of employment

Anecdotally, most private-sector employers – and some nonprofits, particularly in health care – have been reporting difficulty for quite some time attracting and retaining enough talented employees. Compensation alone is not the solution to this challenge, but it can be an important tool for an employer to maintain a workforce that enables it to compete and achieve profitable growth.

Written by: Terry Bush, SPHR - Director, HR Services
tbush@klcpas.com
Phone: 574.289.4011, x205