When you purchase salary survey data, the data is a snapshot in time and has an effective date.
But you want to use the data to create salary ranges for the next year. So, that means you need to age the data to align it to the next year.
In other words, aging the survey results accounts for the time between when the data was collected and the date you want to apply the data.
These days we have software that does this for us. But I have had conversations with employer clients lately about how you do this in Excel. So, here is an example:
STEP 1 – Determine the effective date of the salary survey data.
STEP 2 – Determine what date you want to age the data to in the next year.
STEP 3 – Calculate how many months are between these two dates.
STEP 4 – Determine what annual aging factor percentage to use. There are several factors to consider. See the image associated with this post.
STEP 5 – Calculate the aging factor for the number of months between the two dates.
STEP 6 & 7 – Use the aging factor to calculate the aged base salary and total cash compensation (TCC).
Then you use the aged data to update your base salary ranges associated with pay grades. And you use it to update your target bonus percentages and target sales commissions.
And if you need help, send me a message.
What if you don’t age your salary survey data? You will be using numbers that aren’t aligned to the next year. You will be providing base salary ranges and target incentives that are lower than what is considered competitive.
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