The Connection Between Job Analysis and Market Pricing
Market pricing can help organizations arrive at an externally competitive wage that will help them recruit, retain, and motivate their workforce; but equally important is developing an accurate sense of a job’s internal worth and value to the company. This becomes even more critical as the size of the organization increases and employers have to create pay grades and pay structures to ensure equitable compensation for similar jobs. Market analysis is not just externally pricing an individual position; it is one step in the overall process of determining a fair compensation structure.
The challenge with market pricing alone is that it only gives companies part of the story: the external value, or base pay, for a position. It does not take into consideration the internal job worth which may not align to the external market because of a variety of factors, including the number of individuals employed by the company, geographical region, budget of the company, as well as specific company position requirements.
Let’s compare an administrative assistant position in a small family-owned business with an administrative assistant in a large corporation. The responsibilities vary; the complexity of the job differs as well as the training and education requirements. It follows that base pay would also differ. A small family-owned business is not going to be able to offer or compete with the compensation package on par with a large fortune 500 corporation. Internal job evaluation helps companies develop and align salary and benefit structures relative to the worth of the jobs within their organization.