The Reality and Promise of Market-Based Pay
by David Barcellos

Published in Employment Relations Today , Spring 2005 (Volume 32, Issue 1),
© copyright 2005, Wiley Periodicals, Inc.

Abstract

Market-based pay has supplanted traditional internal equity-driven job evaluation systems to become the dominant approach to compensation program design among larger companies. While this solves many of the problems associated with job evaluation, direct reliance on salary survey data has its own difficulties. Nevertheless, there has been little meaningful improvement in salary survey methods, nor in the technologies we use for establishing the market value of jobs, over the period that market-based pay has risen to prominence. This is not for a lack of possibilities, as is illustrated by compensate.com’s novel approach to overcoming the challenges of market pricing. Yet despite such opportunities for improvement, most major compensation services firms don’t seem to be investing in the development of new market-pricing technologies. The author argues that the compensation community should demand better.

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