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Understanding and Defending Comparable Data in Labor Market Analysis

This presentation, given by Dr. Jeffrey Ling at the 2014 FPELRA Conference, explores the essentials of identifying and using comparable organizations in labor market analysis. Key discussion points include how comparables vary by classification, the data needed for accurate comparison, effective analysis methods, and strategies for presenting and defending your findings in negotiations. By understanding supply and demand dynamics, competitive landscapes, and compensation philosophies, organizations can better navigate the labor marketplace.

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Understanding and Defending Comparable Data in Labor Market Analysis

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  1. COMPARABLES – Determining & Defending Them Presentation for 2014 FPELRA Conference Jeffrey Ling, PhD Evergreen Solutions, LLC jeff@consultevergreen.com

  2. Our Discussion • Who are your comparables and do they vary by classification? • What data do you need from your comparable organizations? • What are the best methods for analyzing comparable data? • How do you present the data? • How do you defend your work during negotiations?

  3. Who are your comparables and do they vary by classification?

  4. Comparables • Comparables are about: • Marketplaces: where you go to “purchase” labor from • Competitors: who enters the same marketplace you do • Competition: how active are others in the marketplace • Market rate: what rates they are willing to pay.

  5. Marketplaces • the markets where workers compete for jobs and employers compete for workers. • Marketplaces are based on: • Supply – who is available? • Demand – who is needed? • Expectation of each – what does the future hold for supply and demand?

  6. Supply and Demand • Price or wage is dictated by supply and demand. • A change in either can cause a change in price.

  7. Key Concern: Increasing Demand • A shift in demand in the market raises the price. • Demand typically increases in a strong economy.

  8. Competitors • Competitors are those who buy where you do and seek the same product. • There is a hierarchy in the marketplace that translates to the equivalent of “branding.” • Different jobs, job families, and functions can have different competitors.

  9. Competition • Your strategy, resources, and needs as well as these characteristics of your peers define your market position. • Competition is not uniform across jobs or job families. • Competition varies over time.

  10. Key Elements • Define the Relative Market by job family. • Define Key Competitors by job family. • Determine the market trend by job family. • Know your compensation philosophy or desired relative market placement.

  11. What data do you need from your comparable organizations?

  12. Data • “Garbage in is garbage out.” • Data can provide any answer you want. • Following convention rules protect you.

  13. What Do You Need? • Type of structure • Ranges (min, mid, max) • Actuals (average, median) • Variation (standard deviation) • Anticipated changes (percentage to actual and range) • Employee count (FTE) • Match quality (rating) • Turnover (percentage)

  14. What are the best methods for analyzing comparable data?

  15. Analysis • Easy to understand, interpret, and repeat. • Mix of numbers and graphics. • Generally accepted methods and tools. • Factor in the quality of the matches and sufficiency of data.

  16. How do you present the data?

  17. Reporting • Comparison of ranges and actuals with variation. • Power of the midpoint. • Impact on the relative market of respondents. • Comparison of market response (turnover). • Quality of the comparison.

  18. How do you defend your work during negotiations?

  19. Defense • Understand that agendas come into play. • Know the other side and their desired position. • Know the market fully – more is always more. • Identify your philosophy and your parameters.

  20. Thank you Jeffrey Ling, PhD Evergreen Solutions, LLC 2878 Remington Green Circle, S101 Tallahassee, FL 32308 850-284-2731 jeff@consultevergreen.com

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