CompAnalytics Case Study

SBS Industries' senior management use Comp/Analytics during the merit pay budgeting process to assess progress on achieving the corporate pay strategy for each of the Company's Departments and business units. Analysis within the Engineering Department suggested that the Design Engineering unit's base pay policy for its 20 employees was not aligned to achieve corporate objectives. Top performing employees are positioned lower relative to the external market than are average performers in the "meets expectations" category. This trend is not uncommon in organizations that allocate merit increases equally for all employees.

Working with Design Engineering managers, pay performance targets were established ranging from market P45 for "meets expectations" to P75 for "top performers" Based on these target goals the current pay policy for the department was nearly $50,000 over market. A high percentage (80%) was due to high market position for average achievers.

Using annual market and merit budget growth of 3%, the Design Engineering department developed a 3-year plan to achieve a positive competitive advantage relative to the external market for base pay.

The merit pay implementation plan projected a turnaround for pay / performance inequities in the first year. The plan projects achieving target market parity in the 3rd year, and projects a net savings from budget of $52,000, a gain in competitive market advantage of $2,600 per employee.