Measured vis-a-vis mark to market based on job-wise benchmarking
An organization must decide as a matter of policy the kind of pay-master it will be. Depending upon itÃƒÆ’Ã‚Â¢ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬ÃƒÂ¢Ã¢â‚¬Å¾Ã‚Â¢s own individual circumstances, it may decide to pay above-market, below-market or at par. In any case, it is important that the organization is aware of this aspect and has a conscious policy towards it.
This practice essentially refers to positioning the organization in the wide spectrum of the overall pay range in the entire industry. In other words, this refers to deciding what kind of pay-master the organization will be. To find out the pay-spectrum, an external agency is generally hired which maps out the salary data for competition companies in the same industry. The mapping is done between the job content and the compensation and the designations are disregarded. Once, the entire spectrum is arrived at, the organization decides where it will place itself in it. For example, it may decide to pay above market median if it is facing challenges in acquiring good talent. If it is a large and already well-established organization, it may face relatively less difficulty in attracting good talent and it may decide to pay below market. This is an extremely important function for the HR department which forms part of the overall management planning and has a long term impact on the performance in the organization since it directly impacts what kind of employees work in the organization.