What Drives Compensation?

. [Virtual Presenter] Good morning everyone! Let's take a look at our discussion topic for today. We will be talking about compensation and understanding the main drivers behind it. We will be exploring what factors affect market pay differentials and how companies can ensure they are properly and competitively compensating their employees..

. [Virtual Presenter] Compensation can be an incredibly complex issue for companies to navigate. To start, most companies look at grade, industry, and location to determine the right pay for a job. But is that the correct approach? To better understand the main drivers of compensation, we analyzed the data of the Mercer compensation survey to get an insight into prevailing wages. Our analysis showed that with 141 companies, 39000 incumbents, and 15 million markets - the data is more complex than ever before! Now it's up to us to make sure the pay is chosen correctly..

[Audio] The key drivers of pay and the market pay differentials are powerful measures that can help you achieve a successful compensation strategy. Our analysis has enabled us to uncover the factors that impact pay, such as the geographic region within a country and the specific industry sector. With this information, you can make informed decisions when considering questions regarding pay progress, benchmarking and more. By taking into account these market pay differentials, you can craft a compensation strategy that fits a global workforce, ensuring that all employees are rewarded fairly..

[Audio] When it comes to compensation, there are a number of key drivers that are factored in on a global level. These include job level, as measured by Mercer’s Position Class, as well as the importance factor, which is usually determined through an additional assessment or analysis of the duties and requirements of the position. The job level and importance factor are each assigned a numerical value from 1 to 10, with 1 representing the lowest level of pay and 10 representing the highest..

[Audio] Compensation is determined by a number of key drivers and these vary greatly in importance across the world. Our data analysis shows that position class, industry, job family, parent country, age, career stream, region, and gender are all key drivers of compensation in global, Australia, Japan, Poland, Russia and Sweden markets. However, it is clear that the relative importance of each driver varies across different markets. For instance, we can see that age is more influential in Japan than Russia, and vice versa. Therefore, when planning for compensation it is necessary to take into account the different drivers of pay and their relative importance in each market..

[Audio] In certain markets, the industry you're working in is just as important as your job level in determining your compensation. This is especially true in Ghana, Guinea, Qatar, and Uganda. Factors like the market size, job purpose, and years of experience are all important elements to consider when discussing compensation..

[Audio] The global labor market has a wide range of industries for employees to choose from, each offering different levels of compensation. Our research has revealed that the industry in which a job is found is the second most important factor in determining pay. The highest paying industries are Energy, Mining, Life Sciences, while Retail, Logistics and Healthcare are lower paying. Understanding market pay differentials can help you to make an informed decision about how to optimize your earnings..

[Audio] Research has revealed that the highest paying industries vary across markets. The energy industry tops the list globally, yet barely makes the top 3 in some markets. We see that the top 3 industries in each market range from mining and energy to life sciences and financial services. This data highlights the importance of analyzing the local market and adjusting compensation accordingly, to ensure the most attractive compensation packages are offered..

[Audio] How we look at a problem, and whether we’re able to see beyond it, affect the outcome. Henry David Thoreau said, “The question is not what you look at – but how you look, and whether you see...” This approach can also be applied to compensation. Next, we’ll examine how students often struggle when studying for tests, and how to overcome these challenges..