Average Salary Metric

Average Salary Metric

REFERENCE NUMBER: BR002

Description

Average Salary Metric communicates average salaries for specific departments or Job Types, and allows meaningful comparisons of employees who work for different divisions or at different locations.

Business Case

The Average Salary Metric makes it easier to analyze comparative salaries across different regions and business units and recommend guidelines on salary changes.  This metric helps to answer a simple question: are we paying a certain group of employees in New York more than we are paying employees with a similar skillset in San Francisco?

Average Salary Metric is also a stepping stone to more sophisticated salary analysis, such as statistical analysis of salaries, their range and standard deviation, which are extremely useful for larger companies.

Required Data

Annual Salary   Example: $56,000; £47,000
OrgPlus products will calculate average salary automatically.

Samples

Implementation Considerations

There are many considerations that can be taken into account when defining the average salary calculation.  In fact, multiple average salary metrics may be desirable.  Some metrics are listed below.  Your HumanConcepts Professional Services Consultant can work with you to define calculations that take into account the available data and your business needs.

Job Type

Example: Full-time, Part-time, Contractor
Average Salary Metric is most useful when it is reported by Job Type, as it gives HR Professionals the option of comparing people with similar skill-sets across multiple regions and business units, as well as against industry averages.  This metric also enables periodic reviews of salaries for competitiveness, and makes it easier to adjust salaries equitably to cost of living changes.

Salary Range

Example: $29,500-$62,000
Larger organisations often analyze salaries by Job Type and Range.  A small range would indicate that most people with a similar skillset are paid about the same amount of money.  A large range would indicate that people with similar skill-sets have very different salaries.  A large range within the same Job Type could indicate that some employees are either under-paid or over-paid with respect to their peers.