Market Pricing & Salary Surveys Flashcards

Which statistical measure is most commonly used to represent the 'market rate' for a job in salary survey data?

Answer: Median

The median is preferred because it is not skewed by extreme high or low values the way the mean can be.

When aging survey data to the current date, a company uses a 3% annual salary increase factor. If the survey was conducted 9 months ago, what aging factor should be applied?

Answer: 1.0225

9 months is 0.75 of a year, so the factor is 1.03^0.75 ≈ 1.0225.

A company's pay practice line shows that its actual pay falls below the market pay line. This situation is described as:

Answer: Lag strategy

A lag strategy intentionally pays below market, often used to offset superior non-cash benefits.

Which survey data element best indicates the spread of actual pay practices among survey participants for a given job?

Answer: 25th and 75th percentile

The 25th and 75th percentiles show the interquartile range, capturing mid-distribution pay spread while excluding extreme outliers.

In a salary survey, 'incumbent data' refers to:

Answer: Data about current employees holding the benchmarked jobs

Incumbent data captures the actual pay of employees currently in the surveyed roles at participating organizations.

When evaluating a salary survey, the 'effective date' of the data matters primarily because:

Answer: Pay rates change over time and older data may understate current market

Salary levels change with market conditions, so data must be aged forward to reflect current market rates.

Which of the following is a key limitation of using a single salary survey as the sole source for market pricing?

Answer: It may not represent the full competitive labor market or may have a biased participant pool

Relying on one survey risks that its participants don't reflect your actual labor market competitors.