Tag: Salary Surveys

Strategy in Sub-Saharan Africa

Vital Partners, Shared Priorities: The US Strategy Towards Sub-Saharan Africa

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group monitors labor markets that are making headlines worldwide and wants to share news and updates on the current conditions in these markets.

The White House released in August 2022 the US strategy toward Sub-Saharan Africa (SSA). Its renewed policy supports four main objectives, including advancing pandemic recovery and economic opportunity.

A priority and opportunity

SSA is of growing importance on the world stage. Comprising 49 countries, the region is a geopolitical priority and an emerging economic opportunity. SSA countries hold roughly 25% of United Nations General Assembly seats. Moreover, the region is integrating into the world’s largest free trade area.

The US Department of Commerce’s International Trade Administration describes SSA as presenting real opportunity, with indicators such as:

  • A combined market population of over 1.2 billion people (that is expected to double by 2050),
  • A gross domestic product of more than US$1.5 trillion, and
  • Home to some of the fastest-growing economies in the world.

The World Bank reports that economic activity in the area is set to expand by 3.6% in 2022, 3.9% in 2023, and 4.2% in 2024. Additionally, its young population makes SSA an attractive investment destination. Massive demographic shifts in this part of the world provide tremendous opportunities to create jobs, boost incomes, and reduce poverty, especially in a global environment of slowing growth.

China and its growing influence in the region

The world is well aware of Africa’s importance, encouraging countries to expand their political, economic, and security engagement with African states. In the past 20 years, new actors, such as China, have been shifting dynamics across SSA. And Chinese influence in the region is real and significant.

In 2001, China received less than 3% of the region’s exports, compared to nearly 19% for the US. In 2009, China overtook the US as SSA’s largest trading partner. Almost 20 years later, China has emerged as the region’s single greatest export partner, holding an 11% share of exports in 2019, while the US share dropped to 5%. China’s Belt and Road Initiative has invested in SSA through transportation, power, water supply, and other infrastructure projects. China has also provided loans, investments, and aid.

The US reframes its Sub-Saharan Africa partnership

The US is responding to growing foreign activity and influence in SSA and is engaging a region undergoing significant transformation. “It would be a strategic mistake for the US to abandon its engagement with SSA altogether—especially as US adversaries and competitors are relentlessly increasing their investment in the region…” said Daniel Runde, Director of the Project on Prosperity and Development, and Sundar Ramanujam, Research Associate of the Project on Prosperity and Development at the Center for Strategic & International Studies (CSIS).

Biden’s policy differs from those of previous administrations because it focuses on overhauling its relationship with SSA from donor-recipient to genuine partnership. “Biden’s team extols Africa’s strengths and is proposing US-Africa partnerships on a range of issues,” said Mark Bellamy, Senior Advisor of the Africa Program at CSIS.

Further, Devex reports that the strategy has generally been well-received and is seen as sending a strong message about US engagement in the region. “It’s a strategy that reflects the region’s complexity—its diversity, its power, and its influence—and one that focuses on what we will do with African nations and peoples, not for African nations and peoples,” said US Secretary of State Antony Blinken as he announced the strategy.

It’s also an effort to make regional engagement authentic and not just a battleground to compete with China and Russia. “Too often, African nations have been treated as instruments of other nations’ progress rather than the authors of their own,” added Blinken in his announcement.

Why this matters to employers

With the intent of the US to reestablish ties and reinvest in SSA, employers with a presence in the region can anticipate a significant shift in the labor market in years to come. Monitoring the labor market as early as possible is critical for your organization to seize economic opportunities and remain competitive. Keeping an eye on market shifts enables your organization to plan and make informed decisions about hiring, pay management, employee benefits, and more.

How we can help

We at Birches Group survey leading employers in over 150 countries with a consistent methodology designed for dynamic, emerging markets across SSA. We survey labor markets of varying sizes, focusing on employers that set trends. Get updated and relevant data on every country in SSA. Speak with our consultants today to understand our data and how you can use it for your organization.

References:

Monitor The Labor Market

5 REASONS WHY ORGANIZATIONS SHOULD MONITOR THE LABOR MARKET

Written by Kai Donesa on . Posted in Resources.

The labor market is constantly changing and evolving. It changes to reflect demands and pressures from different sectors, industries, and locations. New jobs emerge, old ones disappear, and wages fluctuate—sometimes due to external forces and local or regional economic factors. Organizations must stay on top of trends and monitor the labor market to remain competitive. Those that don’t keep up risk being left behind and failing to meet the needs of their people.  

One way for organizations to stay ahead is to monitor the labor market. Doing so helps human resources (HR) teams understand how their organization is affected by market movement. Reviewing and interpreting labor market data allows HR teams to address critical questions such as: 

  • How can we determine how much the market pays for similar roles? 
  • How can we competitively position ourselves against our target peers? 
  • How can we become an employer of choice in the local labor market? 

Keeping an eye on the labor market enables organizations to make informed decisions about hiring, pay management, employee benefits, retention strategies, and more.  

This blog post will explore why organizations should track the labor market and how to do so effectively. When the organization knows what is coming, it can plan and ensure it is well-positioned when the opportunity to grow strikes. 

Establishing market composition and position 

Using labor market data can help organizations clearly and consistently establish their competitive strategy, notably their: 

  • Target composition, or which group of employers are similar and more relevant to the organization. Consider organizations from the same sector, employers you lose your staff to, and organizations you often hire staff from.  
  • Target position, or how competitive an organization wants to be. Identify the ideal percentile (e.g., 50th, 75th) of the labor market the organization wishes to attract.  

Determining its target composition and position enables an organization to understand where it stands against key employers in the market. It also guides the organization on what it needs to do to lag, match, or stay ahead of relevant comparators. Organizations must consider their compensation policies and budget to establish their target composition and position. 

Setting benefits 

Labor market data also gives up-to-date insights into benefits widely provided in each country. In addition to salaries, benefits come in the form of cash (allowances and bonuses), in-kind benefits (company bus, gift baskets, company products, etc.), and non-salary benefits (retirement plans, healthcare coverage, family benefits, and leave provisions). 

As the organization reviews compensation and benefits surveys, it can easily identify mandatory, cultural, and market practice benefits, as well as benefits that address local hardships. And while salaries often attract key talent to an organization, benefits make up a significant part of the compensation package in developing markets. By providing the proper compensation and benefits, the organization can remain competitive and retain talent.  

Identifying HR gaps and making the necessary adjustments 

Identifying the gaps in HR practices is another way organizations can benefit from monitoring labor market information. Some of the few questions that organizations will want to address are: 

  • Do our hiring rates remain competitive? 
  • Are we able to retain the talent we need? 
  • Are our employee benefits competitive in the market? 

When the organization encounters talent management issues—such as challenges in attracting the right talent or holding on to staff—it may be time to make adjustments to the compensation package. 

If the organization is looking for data scientists—but hasn’t found suitable candidates—it may be time to rethink the starting salaries to ensure they are comparable to other organizations hiring for a similar job. Or perhaps the organization starts to lose staff after some time. It may need to reassess policies on pay movement, benefits packages, or career advancement to entice staff to stay longer.  

Understanding the impact of the data

Organizations need to go beyond the labor market data. They must understand how changing HR policies and practices in reaction to emerging trends, shifts, and volatility affects staff. So, the question that needs to be addressed is: Do the organization’s policies and initiatives reflect labor market changes and demands? 

A recent example would be the shift from working at a traditional office to working remotely or in a hybrid format. After years of being accustomed to working from home (in response to the COVID-19 pandemic), employees now expect flexible work arrangements—so much that they are willing to leave the organization if it does not offer the option. 

Another example is managing dispersed teams. With many employees now preferring to relocate to places that are sometimes far from the office, how will adjustments to compensation and benefits affect staff based in different areas? Should organizations still base salaries on city rates or adjust them based on where the staff chooses to relocate?

Thus, organizations need to use labor market data and its implications to help inform their policies. Other key questions that organizations need to answer when looking at labor market data include: 

  • Is our compensation program reaching the talent we need? 
  • How can we maintain our relevance in the labor market? 
  • Are there opportunities for improvement? 
  • Will changing our policies and practices help or hurt us? 
  • What are the implications of these changes on staff? 

Managing compensation even through uncertainty 

Now more than ever, organizations need to closely monitor the market. With inflation rising in countries across the globe, employees need to know that their employer has a plan to help them get through turbulent times.  

Organizations can best manage economic turmoil by monitoring the labor market coupled with a special measures policy. When volatility happens, chances are employees are going to ask HR how the organization will help their families manage their day-to-day expenses. When market conditions warrant adjustments to compensation, this is easily defensible when you have the market data to support it.   

When unpredictable events such as economic volatility, natural calamities, armed conflict, and periods of unrest affect the regular dynamics of the labor market, organizations must keep participating and monitoring labor market movement. By doing so, the organization can determine proper triggers, based on data, that would justify changes to compensation and benefits, as well as the frequency to which adjustments are made.  

Bottom line: Know where you stand 

The labor market continues to shift. It may be difficult for organizations to keep up as the market relies on changes from other sectors of the economy and events from around the world. As such, it is critical to keep track of the ever-changing landscape. This ensures that organizations adapt and adjust policies and measures to meet new demands, positioning themselves for success.  

To do this, organizations need up-to-date data about the labor market to know what conditions are like in their area. Tracking the labor market through salary surveys can offer helpful insight into emerging trends that could impact the organization. Monitoring will help employers understand current conditions to make informed decisions about jobs, the market, and skills and performance. In the end, keeping one’s eyes on the labor market helps organizations stay competitive.  

Does your organization need labor market data, especially on developing markets? We at Birches Group offer the most comprehensive salary survey coverage, with data on over 150 countries. We survey markets of varying sizes and focus on leading employers that set trends. Get in touch with our consultants to get started. 

Carla is a part-time copywriter in our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr. 

Follow us on our LinkedIn for more content on pay management and HR solutions.

Zambia’s Debt Crisis: What You Should Know

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group monitors labor markets that are making headlines worldwide, and wants to share news and updates on the current conditions in these markets. 

Defaulting on debt

In November 2020, Zambia became the first African nation to default on its Eurobonds during the COVID-19 pandemic, bringing the country’s debt distress into headlines around the world. The debt crisis resulted from “years of economic mismanagement,” the International Monetary Fund said. Drought in 2019 and COVID-19 in 2020 worsened Zambia’s economic challenges.  

A precarious macroeconomic situation 

But the Zambian economy was witnessing “a weak macroeconomic condition” even before the COVID-19 outbreak, the United Nations Conference on Trade and Development said. Growth was sharply declining. Zambia was facing severe challenges such as high inflation, unsustainable debt levels, low international reserves, and tight liquidity conditions, according to the economic outlook of the African Development Bank (AfDB). 

Over the past five years, Zambia’s economic growth slightly accelerated in 2017 and 2018, slowed in 2019, declined to a negative in 2020, and resumed in 2021, as reported by the 2022 Index of Economic Freedom. In 2018, Zambia’s Gross Domestic Product (GDP) was estimated at US$ 26.31 billion, with an annual growth rate of 4 percent. But an “expansionary fiscal policy mainly financed by external and local borrowing” caused Zambia’s debt to hit 91.6% of its GDP in 2019 and 104% in 2020.  

Inflation nearly doubled, and the Zambian kwacha quickly depreciated by 64%. When COVID-19 hit Zambia being in this situation, the country’s precarious macroeconomic position took a turn for the worse. The Zambian economy fell into a deep recession, the AfDB said. More inflation, currency depreciation, and a significant debt burden forced Zambia to default on its debt obligation and seek more relief from lenders. 

A new dawn for Zambia 

In August 2021, Zambia’s trajectory significantly shifted with the election of a new government led by longtime opposition leader Hakainde Hichilema. As Zambia’s seventh president, Hichilema inherited a nation with unsustainable debt larger than previously known and had to deal with the impact of its debt default.  

According to Deloitte, debt restructuring, talks with the International Monetary Fund (IMF), and a more stable exchange rate, among other measures, would be “fundamental to Zambia achieving macroeconomic stability.” Hichilema outlined an ambitious agenda to address structural weaknesses through macroeconomic reforms guided by an IMF program. 

Engaging the IMF 

“Zambia is in debt distress and needs a deep and comprehensive debt treatment to place public debt on a sustainable path,” the IMF said. The government began to actively seek a comprehensive debt restructuring. Specifically, it initiated a creditor engagement strategy to secure immediate debt service relief and better terms, the AfDB said. 

On December 6, 2021, the government of Zambia announced it had reached a staff-level agreement on a US$1.4-billion extended credit facility with the IMF from 2022 to 2025. On September 6, 2022, the IMF’s Executive Board approved a 38-month credit facility amounting to US$1.3 billion to “restore economic stability and foster higher, more resilient, and more inclusive growth.” 

These recent events marked a significant milestone and set the path for negotiations with Zambia’s lenders to restructure the country’s external debt.  

Focusing on economic recovery 

The country’s economic outlook has markedly improved, given renewed optimism and increased investor confidence post-elections. Additionally, the newly elected government has made several important policy announcements, including an enhanced focus on rebuilding the economy and creating an enabling business environment to foster growth. 

Zambia’s growth in the coming years is to be likely driven by “a clear path to debt sustainability, leveraging the country’s mining potential, increased private sector participation, focus on job creation, and good governance,” said Deloitte & Touche (Zambia) Managing Partner Humphrey Mulenga in Doing Business in Zambia. Economic activity will gradually pick up, with the World Bank estimating growth at an average of 3.8% from 2022 to 2025. While the market sentiment has markedly improved, the Zambian economy remains fragile, the IMF said in a September 2022 report. 

How we can help 

We at Birches Group survey leaders in over 150 countries with a consistent methodology designed for dynamic, emerging markets such as Zambia. We survey labor markets of varying sizes, focusing on employers that set market trends. Our survey data empowers organizations to monitor and benchmark positions in local markets and create salary structures tailored to each country’s requirements while conforming to global standards. 

Speak with our consultants today to access up-to-date labor market data and understand how to use it for your organization. 

References:

The Zimbabwe Labor Market: A Fragile Economy 

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group has been keeping track of the volatile economic conditions in Zimbabwe and wants to share updates on the current labor market conditions there.  

Waning trust in local currency 

Al Jazeera reports that Zimbabwean authorities are struggling to pull the Southeast African nation from the grip of a severe economic crisis characterized by a rapidly devaluing local currency. Trust in the Zimbabwean dollar (Zimdollar) has been low after people saw their savings depleted by hyperinflation in 2008. Our July 2022 salary survey of the Zimbabwe labor market notes that the economy had dollarized between 2009 and 2019. 

Although the Zimdollar was reintroduced in February 2019, it continues to be sidelined in favor of the United States dollar (USD). Businesses and individuals see the USD as more acceptable overseas and better at holding long-term value. Because the Zimdollar became untradeable outside the country, employers were required to start paying salaries in USD.  

Local media outlets such as NewsDay have confirmed that demand for USD salaries has increased across economic sectors. In an opinion piece for New Zimbabwe, African affairs expert Teresa Nogueira Pinto writes, “There are now increasing fears that the country will experience another hyperinflation crisis as in 2008.”  

An exceptional situation 

Our Market Monitor categorizes labor market conditions according to six levels of volatility. Since mid-July, Zimbabwe has been classified as Level Five, indicating a prevailing practice to denominate salaries in USD or Euros. In our most recent salary surveys of the country, we have further noted that employer participants across sectors (including the NGO sector) now denominate and pay salaries in USD. This includes cash and in-kind benefits. 

However, our latest surveys indicate little to no market movement since February. We have not observed any activity in our multi-sector salary survey. But as of July 2022, we have seen minimal movement in our NGO salary survey: pay rates for support-level staff increased by 1.9% and at the professional or managerial level by 0.2%. Nevertheless, inflation has continued to soar in the triple digits since May. The Reserve Bank of Zimbabwe, the country’s central bank, reported an annual inflation rate of 256.9% in July from 191.6% in June. 

Next steps for employers 

It is vital to have policies and procedures to keep pay programs functioning and maintain business continuity in countries like Zimbabwe, where the labor market is unstable. A Special Measures Policy should be established to determine the triggers for updating salaries and benefits. In addition, organizations must decide how they plan to implement the next steps for their staff. Employees need to know that they can rely on their employer to assist them during times of crisis.

How we can help 

We at Birches Group have extensive expertise in developing Special Measures Policies for organizations across different markets and sectors. Contact us today to find out how we can create one for you. 

References:

Ukraine Crisis

International NGOs Respond to the Ukraine Crisis

Written by Kai Donesa on . Posted in Uncategorized.

Birches Group wants to provide updates on the current labor market conditions in Ukraine, where the situation has been volatile.

Nearly six months under siege

Russia’s armed attacks against neighboring Ukraine show no signs of ending, and fighting intensifies after months of escalated conflict, said Rosemary Di Carlo, United Nations (UN) Under-Secretary-General for Political and Peacebuilding Affairs, at a UN Security Council briefing in late July. As the 2022 Russia-Ukraine conflict soon enters its sixth month, attention is increasingly turning to longer-term humanitarian, recovery, reconstruction, and socio-economic impact.

The war in Ukraine has prompted a massive outpouring of support since it began on February 24. The UN and its humanitarian partners have offered aid to 12 million people. Help has come from food and livelihood assistance, protection services, mine clearance, and clean water and sanitation access. Emergency hygiene items, health care, mental health care, and shelter have also been provided to Ukrainians directly affected by the conflict.

The UN Refugee Agency estimates that nearly one-third of Ukrainians have been forced to evacuate their homes. Over 11.1 million people have fled Ukraine’s borders; within the country, over 6.6 million people remain displaced.

Global NGOs respond

The global humanitarian response to the crisis has been swift and dynamic. The UN Office for the Coordination of Humanitarian Affairs said at least 250 local and international non-governmental organizations (NGOs) were helping in the aid response—a number that has more than doubled from before the war. An ACAPS report noted that international NGOs have scaled up their humanitarian operations in and around Ukraine in recent months. They are settling in for the long haul while developing recovery and reconstruction plans.

For example, the Médecins Sans Frontières team has almost quadrupled, with more than 650 staff. Save the Children International, whose Ukraine program was one of its smallest worldwide, is now set to become one of the largest.

Although the aid response has been positive, it has not been without challenges.

Challenges facing NGOs

As the Ukraine crisis pushes on, so has the demand for people with the skills and experience to fill critical humanitarian and development roles, Devex reports. With pledges to support Ukrainians continuing to be announced, Devex also notes a steady flow of job opportunities for development professionals. Among the international NGOs actively hiring in response to the invasion are Catholic Relief Services, HelpAge International, International Medical Corps, Red Cross and Red Crescent partners, Chemonics International, and Oxfam International. Response program managers, coordinators, and directors are among the advertised positions on job boards.

Next steps for employers

NGOs and commercial development organizations seeking to expand to or scale up their activities in Ukraine will need salary survey data. Salary survey data is a vital component in recruiting and hiring new staff. It helps organizations understand the market, identify key employees and potential talent, and ultimately make better decisions. Without this data, organizations are left in the dark and are unable to identify opportunities or assess talent.

Salary survey data can be used to benchmark compensation packages against the local market and help make informed decisions about how to retain employees. Survey data can also help organizations determine an appropriate salary for current staff, as well as the market rate for positions when hiring new people.

How we can help

We at Birches Group survey leaders in over 150 countries with a consistent methodology designed for developing markets such as Ukraine. We survey labor markets of different sizes, focusing on leading employers that set market trends. Our survey data empowers you to benchmark positions in local markets and to create salary structures tailored to each country’s requirements while conforming to global standards.

Speak with our consultants and experts to understand our data and how to use it for your organization today.

References:

Using Local Market Data

USING MARKET DATA FROM NEIGHBORING COUNTRIES AS A PROXY IS NOT THE RIGHT APPROACH

Written by Kai Donesa on . Posted in Resources.

When companies need to set or review salaries, they normally use local market data as their external reference. But what do you do when there is no local market data available? This is common in smaller countries where there are not as many established employers and little to no survey providers are present. As HR consultants, we have received many inquiries on this matter and have seen companies resort to using salary data from nearby countries in the region as their proxy.

While it is understandable that in this case, companies would think that salary data closest to them in terms of proximity could be a valid alternative because perhaps countries within the same region would share similar characteristics, this is certainly not the case. We conduct salary surveys in over 150 countries, three times a year and would argue that while the country next door would have many similar jobs as your own, salary rates and pay packages are considerably different.

In Birches Group, we believe that local staff salaries should always be based on local market data. Here’s why:

The cost of labor in every country varies significantly, even if they all belong to the same region. Local conditions and availability of talent are what drive salary movement in any country. Talent that could be widely available in one market, may be very limited in another. So, when smaller markets reference their salaries against larger markets, especially if they are regional locations where wages are usually three to four times higher, those salaries would be overstated if put into the local context.

Using the example above, this is a chart that illustrates the equivalent pay range for a BG-10, a Seasoned Professional, in each of the Southeast Asian labor markets. If you are an employer in Laos and lack salary data for a BG-10 level, it would not be advisable to reference the equivalent salary range in Thailand just because you share a border with them. Similarly, if you were to apply Thailand pay ranges locally in Myanmar, not only are you significantly overpaying, but this would also be challenging to defend and maintain moving forward.

Market practice on compensation and benefits is different for every country. For some markets, certain allowances or benefits are mandated by local law, while other markets do not share the same requirement. In other countries, employers provide benefits to address local hardships, such as a company shuttle provided to staff to address the lack of public transport. But if you look at other countries in the same region, this may not be the case. Also, some countries have benefits that are cultural in nature making it unique to their market, while others could have something else. If you reference pay practices from other countries, you risk ignoring the unique conditions of your own market. See this example below:

The chart above illustrates total compensation pay packages for a BG-10 Seasoned Professional in ten countries in east and southern Africa. If you look closely, each component of total compensation varies for every country. Using the example above on pay practices, if you are an employer in Tanzania for example, the pay mix at the BG-10 level is comprised of not only cash benefits on top of base salary but in-kind benefits as well. But choosing to use salary data from Kenya because they are close and they are a regional hub, the pay mix toward total compensation is not the same. If you apply this in the local Tanzanian context, you are missing market practices on in-kind benefits compared to other employers in the local market.

So What Should You Do?

If your organization is in a small market in need of salary survey data, we recommend working with a survey provider whose methodology is designed for developing markets. Survey providers are equipped to launch local salary surveys that can bring employers the market data they need to inform their pay management policies accordingly.

Birches Group’s Community Market Compensation and Benefits Surveys are designed with developing markets in mind. And because developing markets are dynamic, our surveys cover all elements toward total compensation to give our clients the full context of the local labor market. Contact us to access the market data you need or to learn more about our subscription options.

Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.

Follow us on our LinkedIn for more content on pay management and HR solutions.

UNDERSTANDING TOTAL COMPENSATION

Written by Kai Donesa on . Posted in Resources.

In Birches Group, we apply a total compensation approach when analyzing salary survey data.  While we understand that many employers are primarily interested about how their base salaries compare against other comparators, we should not forget that benefits also play an important role in many markets, particularly in developing countries.

For many years, Birches Group has been conducting salary surveys in over 150 countries around the world. Our experience working with high growth markets has shown us that when employers center their decisions on base salary alone, they are essentially discounting the value benefits have in that market and its possible impact on staff recruitment and retention.

If you are working with developing market data, here are three reasons why total compensation is the best approach:

  • Pay Packages Can be Varied – Every organization has its own pay policy. This policy then guides how organizations design their pay packages. Depending on how competitive they want their salaries to be, the types of benefits they can include, and their target peer group, you can imagine how varied pay packages can be in just one single country. In some markets, benefits could be government mandated, some could be cultural, and others could address local market conditions. If all these benefits are provided by majority of your target comparators, then it would not be enough to compete on base salaries alone.
  • Market Practice – As mentioned, some benefits are considered statutory, while others are cultural in nature. It is the responsibility of the employer to know what the local market practice is and tailor their pay policy around this. Not only do you have to abide by what the law states, but also some benefits are given for historical reasons. Concentrating on just cash could make you fall short in the point of view of your staff.
  • Being Competitive – Not all organizations compete the same way. Some companies like to have competitive base salaries but not provide many benefits, while others may not have competitive base salaries but offer very attractive benefits. The only way HR can properly determine competitiveness is through a total compensation view. We believe that it is important for employers to have a “healthy” mix of base salary, cash, and in-kind benefits at every level, where pay packages are competitively aligned to your market but still following internal policy.

Birches Group surveys are designed with developing markets in mind. Our survey reflects employer practice for a wide variety of allowances and benefits, both cash and in-kind, demonstrating nuances commonly found in these markets. And because developing markets are dynamic, every country is updated on an ongoing basis three times a year, in April, July, and October. Contact us to access the survey data that you need.

Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.

Follow us on our LinkedIn for more content on pay management and HR solutions.

JOBS, GRADES, INCUMBENTS: UNDERSTANDING THE LIMITATIONS OF SURVEY DATA AND HOW TO AVOID SURVEY DATA PITFALLS

Written by Kai Donesa on . Posted in Resources.

Salary surveys are an important HR tool. They are necessary for organizations to properly manage and maintain compensation every year. However, survey approaches can differ greatly from one provider to the next, particularly in the information they collect, their approach to job matching, and their treatment and presentation of employer data.

When deciding which survey data to use, it is essential for HR practitioners to familiarize themselves with the kind of information that each survey provides, the methodology behind the analysis, and the limitations that come with every approach. Here are some things to keep in mind to help organizations steer clear of typical salary survey missteps:

  • Limits When Working with Job Data – in our article, “Measuring Market Position”, we explained that too much emphasis has been placed on certain occupations just because they are considered ‘hot jobs.’ But occupational variance is not as significant as you think, especially when looking at salary surveys, because when you update your salary scale, you essentially update your grade levels – and grade levels are generic, not based on occupations. When looking at survey data, job data can be a useful additional reference if you want to look deeper into the market data. But it is important to note that job data is not what impacts your salary scale, but grade level data.
  • Limits When Working with Incumbent Data – we have mentioned in a few of our past articles how incredibly misleading incumbent data can be when used as a survey data reference. Many employers believe that if a salary survey reports actual incumbent salaries, the market data is somehow perceived as more ‘accurate’. In Birches Group, we believe that salary range data, not incumbent data, provides a more stable and realistic view of the labor market. Incumbent salaries are person-based, highly dependent on the qualities of the individual sitting in that position. When working with incumbent salaries, it is common to find outliers that significantly skew the overall market data because their individual salaries are influenced by other factors separate from the job. But when salary ranges become the reference, this provides a more accurate picture of market movement and serves as bookends that prevent outliers in the analysis.
  • Limitations When Working with Just Base Salary – some employers, when looking at survey data, tend to rest their analysis just on base salary information. The problem with this approach is that in majority of labor markets around the world, base salary is only one component of an employee’s actual compensation. To be considered as an employer of choice, you will need to look at the full package, and that includes benefits – cash and in-kind – as well as market practices on non-salary benefits such as pension, medical, etc. In some markets, benefits have a big impact when it comes to recruitment and retention. In other countries, some benefits are mandatory, some cultural, while others address local hardships.

Birches Group’s conducts compensation and benefits surveys in over 150 countries around the world. Our multi-sector approach is designed for high growth, developing markets where leading employers determine local market trends and practices. We capture data from a total compensation perspective because in many of these markets, base salary is only part of the picture. Additionally, because developing markets are volatile, our surveys make use of salary range data to provide our participants a more accurate movement of the market that is linked to the purpose of the job, not the incumbent. Lastly, our surveys are updated three times a year, every April, July, and October which guarantees our clients fresh data every time. Contact us to learn more about our Community™ Compensation and Benefits Survey in your country.

Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.

Follow us on our LinkedIn for more content on pay management and HR solutions.

composition and position from the salary survey

BUILDING YOUR SALARY SCALE: DETERMINING COMPOSITION AND POSITION FROM THE SALARY SURVEY

Written by Kai Donesa on . Posted in Resources.

Understanding the importance of determining your composition and position from the salary survey can improve the way your organization can move forward with your salary scale

Salary surveys are an important tool and step that managers use when building or refining their company’s salary scales. This helps managers establish and set appropriate compensation and benefits within their organization based on information provided by other employers present in the labor market. Current salary surveys offer different methodologies to capture market data, each one with differing employer samples, compensation and benefits information collected, and more importantly, varying approaches to job evaluation. All these are important factors to consider when selecting the right survey to use when building your salary scale.

Often, especially in large labor markets, there has been a preference among many employers to go with the salary survey that has the biggest employer sample. While this approach may seem reasonable, the reality is that many of the employers in the survey will not be relevant comparators, especially if they do not compete with you for the same jobs or share similar characteristics as your organization.

After establishing your compensation policy, creating your job structure, and participating in your chosen salary survey, determining your composition and position in salary surveys is the next crucial step towards building your salary scale.

Selecting the Right Comparator Group

Composition refers to the composition of the market used to establish your competitive position. Many employers will say, “We want to be at the 50th percentile of the market.” Composition answers the question, “50th percentile of what market?”

When designing your scale, you should establish a refined comparator sample, made up of employers important to your organization. Your compensation philosophy should identify the number of comparator organizations to be selected and the criteria they must meet to be included in your market comparison. Examples of criteria to consider include:

  • Talent competitors (those you recruit talent from and lose talent to)
  • Industry peers
  • Organizations of the same size or in the same geographic location
  • Other leaders in your market outside of your sector

Keep in mind that participants in a survey can change each year, with new ones added and old ones dropped. The key is having consistent criteria that ensure, even with a changing survey sample, your selected comparator group is consistent and still sufficient to meet your requirements.

Targeting Your Market Position

Once you have narrowed down your target comparator group, you will need to identify your desired market position. Position is the expression of how competitive you wish to be against your defined market – your target market position. The 50th percentile, or median, is a common target. That means you will be right in the middle of the pack. Is that where you need to be to reach the talent you wish to recruit and retain? Is it the same for all levels of the organization?

Before deciding on a percentile, it is important to refer to your organization’s pay policy. This will ensure that your resulting analysis aligns with the standards approved by your management, is credible, and is easily defensible to stakeholders. Selecting your target market position also depends on whether you wish to lead, match, or lag the market.

If you match the market, you are anchoring your salary scale to where the market is today. With lead or lag positions, you are deciding to either get out in front of the market or trail behind. A simple way to lead is to estimate the market movement from the date of your scale for a period of time forward — typically a year. This ensures your scale is competitive even as other employers adjust their compensation during the same period. A lag position is usually not desirable, as you will be trying to constantly catch up to your peer organizations.

If your organization is facing challenges to recruit or retain talent, you should reassess your target market position and adjust it to ensure your organization is positioned competitively against your chosen market. Sometimes recruitment and retention issues are limited to specific grades or bands. While some organizations may use the same target market position for all grade levels, labor markets are not uniform and do not move in a linear fashion. Certain grade levels can move faster due to high demand, hot skills, or other considerations. Organizations can choose a more competitive target market position for job levels where these talent challenges exist.

Finally, do not forget to consider budgetary resources. Whatever steps you take in the design of your structure need to be made with the cost impact in mind.

Understanding the importance of determining your composition and position from the salary survey can improve the way your organization can move forward with your salary scale. Hopefully, with this information, organizations will feel more informed and empowered to build one of the most important tools in human resources management. Birches Group conducts salary surveys in over 150 countries around the world and uses a simple and straightforward job evaluation approach to ensure consistency throughout. Through our surveys, we help organizations design salary scales that will fit their needs. Contact us to learn more about how we can help you get started.

Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz to know your score!

Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.

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SALARY SCALE CASE STUDY: INTERNATIONAL POTATO CENTER (CIP)

Written by Bianca Valencia on . Posted in Resources.

The International Potato Center (commonly known as CIP) is part of the CGIAR consortium of research centers dedicated to agricultural research and food security.  With headquarters in Lima, Peru, and country offices in 20 developing countries, CIP was facing stiff competition for talent and other issues with their pay structure.  CIP engaged Birches Group to help revamp their compensation strategy and local pay structures, while still maintaining a linkage to the other CGIAR centers, all of which participate in Birches Group surveys.

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