Understanding market movement percentages can help with salary decisions

School districts are frequently challenged with pay practice decisions as they relate to how the broader competitive market adjusts over time. Having a sound system as a foundation can alleviate these concerns and create guidance for a systematic approach toward pay decisions. PSBA assists in this process by publishing market movement percentages annually. To provide a broader understanding of how to use this information, the following article describes key compensation terms and their relationship to market movement.

Internal Equity

Internal equity refers to the relationship between positions, or an assessment of the levels of responsibility, within the same employee group. The foundation of internal equity is grounded in an analysis of the positions’ description to include the responsibilities and minimum qualifications. This analysis should be independent from an assessment of the performance of the incumbent. The outcome of such an analysis is the establishment of internal equity that is summarized in tiered levels demonstrating a distinction between increasing levels of responsibility to the organization from a cross- functional perspective.

External Competitiveness

External competitiveness refers to how a district’s salaries compare to others they are competing with in the market for talent. This is established through a market analysis as the foundation for salary ranges. It should be noted that the analysis of the market needs to include enough different employers for the data to be representative and meeting minimum utilization requirements as well as robust data for purposes of identifying statistical outliers to limit the probability of skewed ranges.

Salary Structure

A salary structure is the result of bringing the internal equity analysis and the market analysis to establish external competitiveness together into one summary structure. A salary structure typically reflects the positions in a like-level group of responsibility and the corresponding market-based range.

Market Movement

Market movement is the percent by which the broader industry market has adjusted salaries in a given time period. As pay adjustments in public education in Pennsylvania are frequently tied to contracts and agreements as well as each school year calendar, market movement occurs every 12 months. This percent can be applied to a well-established structure to reflect competitive markets over time. The recommended window to limit the effect of anomalies compounding is three to five years.

For the benefit of the membership, PSBA annually provides and has recently sent Market Movement percentages for the 2017-18 school year to school leaders. Should you have any specific questions, please contact Dr. Britta Barrickman at britta.barrickman@psba.org.