Summary

Consulting firms plot each organisation's benchmark positions on an xy axis and applies regression analysis to plot a number of best fit lines; upper quartile, median, average and lower quartile. These plotted lines identify the market rates for all organisations based on the number of points assigned to the position.

Each contributing organisation is provided with a copy of the results along with an analysis of their remuneration structure compared to the other contributing organisations in the survey (all companies total).

Calculating Job Size

Position points are converted to salaries based on the following formula:

( Points * Slope ) + Constant

Points = The number of points relate to the importance of the position to the organisation.
Slope = The value that the graph line increases by for every point increase (e.g. $50).
Constant = The value where the line crosses the y axis of the graph at zero (0) points (e.g. $18,000).

For example, a CEO job might be evaluated on this formula as:

( 1600 * $50 ) + $18,000 = $98,000

This formula establishes the midpoint (or full competence level) of the salary scale for the CEO position. Using an 80 - 120% range (most common in salary scales), the salary range for the CEO (about the midpoint of $98,000) is $78,400 - $117,600 where $78,400 is 80% of the midpoint salary value and $117,600 is 120% of the mid point.

Similarly, the other positions described above might be as follows:

Every Position within a company can be plotted on a straight-line continuum of relative worth based on its size. The bigger the job, the more points it is worth and the higher the salary ranges.

The previous examples show the same values for Slope and for Constant but in reality, these can vary because each position is also plotted against every other in the survey to determine the market rates.