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The Ups and Downs of Market Pricing at Siemens

By Greg Moore, WorldatWork | June 2017

With more than 350,000 employees in about 200 countries, leaders at global powerhouse Siemens need to know the ins and outs of job pricing. Hear what Susan Brown, director of compensation at Siemens, has to say about the company’s approach.

There’s a lot that goes into figuring out a competitive pay strategy, but market pricing has proved to be an effective plan.

Among the benefits? Managers get to make data-driven assessments and ensure their pay lines up with similar companies.

In this Q&A, Susan Brown, senior director of compensation at manufacturing and electronics leader Siemens, explains market pricing from a big-picture perspective and how it works in her company.

Q: How does your company determine what a job is worth? In addition to survey data, does it also include external factors such as location?

Brown: Below our executive level, the U.S.organization has focused on external market value.

We use a series of general industry and industry-specific surveys that are well regarded, with enough companies (and relevant companies!) in the sample to ensure a valid and reliable reflection of that market.

Outside of the United States, there are a mix of approaches, in part due to a lack of reliable market data.

Q: What are the benefits to this approach over alternative methods of determining compensation?

A: Every approach whether an internal focus, a level-based market analysis, a job-based market analysis — has pros and cons.

However, all the approaches across our geographies have a common thread: to understand the market (however that is defined) to ensure that we can attract and also retain great employees.

A job-based analysis takes a lot of time, resources and management, yet it is also the most specific for the job and/or industry, so it is a great way to best understand the external market.

A level-based approach also works in markets where data is harder to come by or where aggregating the data across roles ensures a credible and repeatable view of the market. Often we are hiring for a skill set, and that kind of level approach is ideal for finding someone at the right place in their career to make a difference at Siemens.

And of course, in addition to all the external market perspective we have, we also look at our internal market — balancing this internal and external perspective is where the impact lies.

Q: Are you flexible enough to retain star performers? What do you do to create that flexibility?

A: We have salary ranges that enable us to be flexible for a particular hire, or to provide an income path for an employee. We continually look at all the possible levers to provide retention and reward opportunities.

Q: What are some of the drawbacks you've found, and how have you sought to navigate them?

The hardest part of market pricing is finding solid, defensible matches in the market for “tough to price” jobs.

For some companies, that may be hybrid or dual roles. For others, that will be unique roles that don’t exist in standard surveys.

It may be new roles that don't even exist yet, and with the way technology and service delivery are changing, it’s possible more than 50% of jobs in the future don't exist today — a challenge we will see increasingly in the next decade.

About the Author

Greg Moore writes for WorldatWork. For questions or comments about this article, please contact focuseditor@worldatwork.org.


Read the June edition of Compensation Focus.

Contents © 2017 WorldatWork. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork.

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