MEMORANDUM
TO: W. Calvin Horton, Town Manager
FROM: Pam Eastwood, Human Resources Director
DATE: March 10, 2005
SUBJECT: Weighted and Unweighted Averages
PURPOSE
The Committee requested that we provide a pay comparison with unweighted averages and the attached report does so.
BACKGROUND
We compared the dollar amounts of the weighted averages and the unweighted averages for the 42 Town jobs which were surveyed in November 2004.
The unweighted average of the survey respondents was higher than the weighted average pay for 18 of the jobs surveyed. The weighted average of the survey respondents was higher than the unweighted average pay for 19 of the jobs surveyed. For five of the jobs, the amount was the same for weighted and unweighted averages; this occurs when all respondents have one employee in the job being surveyed.
DISCUSSION
The importance of considering the information provided by the weighted average data can be illustrated by using the example of the Accounting Technician job.
|
Organization Name |
Organization Position Title |
# of EE's |
Range Min |
Range Mid |
Range Max |
Average Salary |
|
CHCCS |
Accounting Analyst |
1 |
32,989 |
34,653 |
36,317 |
38,459 |
|
Town of Cary |
Finance Technician II |
2 |
31,866 |
39,052 |
46,238 |
38,230 |
|
UNC Hospital |
Accounting Technician |
9 |
26,733 |
33,416 |
40,099 |
36,381 |
|
City of Raleigh |
Accounting Technician |
7 |
27,553 |
38,332 |
49,115 |
35,516 |
|
UNC |
Accounting Technician III |
102 |
25,036 |
31,242 |
37,447 |
34,033 |
|
Durham County |
Accounting Technician |
1 |
24,811 |
33,764 |
42,717 |
33,764 |
|
Town of Carrboro |
Accounting Technician I |
1 |
25,317 |
31,920 |
38,523 |
32,640 |
|
City of Durham |
Accounting Technician |
4 |
24,882 |
32,036 |
38,444 |
32,410 |
|
Orange County |
Accounting Technician II |
3 |
30,400 |
39,499 |
48,597 |
31,750 |
|
Wake County |
Accounting Technician |
29 |
24,189 |
32,293 |
40,396 |
31,245 |
|
Town of Hillsborough |
N/M |
|
0 |
0 |
0 |
0 |
|
City of Burlington |
N/M |
|
0 |
0 |
0 |
0 |
|
OWASA |
Accounting Tech I |
0 |
26,460 |
32,414 |
38,367 |
0 |
|
|
Average |
16 |
22,271 |
28,664 |
34,995 |
25,497 |
|
|
Weighted Average |
|
25,205 |
32,085 |
38,945 |
33,621 |
|
Town of Chapel Hill |
Accounting Technician II |
2 |
27,895 |
34,300 |
41,843 |
33,051 |
There are 159 employees in this job among the survey respondents (see column headed # of EE’s). When the average pay of each organization’s employee group is sorted, we find that 122 employees or 70% of the total are currently earning an average pay greater than the average pay amount ($33,621) for the Town group.
If we used the unweighted average which gives equal weight to each respondent, we would find that the average pay is shown as $25,497. This comparison to the Town’s average pay of $33,621 would lead us to conclude that the Town’s current average pay was more than sufficient and in fact highly competitive within the local labor market. However, such a conclusion would not reflect the reality of the situation.
When we consider the weighted average pay, which gives weight to the number of positions found in each respondent organization, we find that the Town’s average pay is less ( by 2% or $570) than the average pay for the majority of employees in the group.
While 2% below average pay is not a sufficiently large number for the Human Resources staff to make a recommendation to the Council that the pay grade for Accounting Technician be increased, it is a more accurate picture of the Town’s pay for its current employees in this job than the picture presented by comparison with the unweighted average.
We would continue to monitor this trend each year, and if Town pay becomes significantly less than the weighted average pay for the local market area, we would recommend to the Manager that a change in pay grade (including small pay adjustments for employees if needed to bring average Town pay in line with the market) be recommended to the Council.
In addition to comparing actual pay for Town jobs with actual average pay for organizations surveyed, we also consider the relationship between the midpoint of the Town’s pay grade compared to the pay range midpoints of other organizations, to recognize when other organizations are using their ranges differently with a corresponding impact on employee pay. (Example: The UNC Police department does not use the lower part of their pay grade: all new employees are started at a point near the midpoint of the range. This is reflected in higher average employee pay.)
SUMMARY
We believe that use of the weighted average is supported as a best practice by the literature on compensation analysis and that this practice serves the Town well in analyzing the competitiveness of Town pay ranges and average Town employee pay compared to those organizations with whom the Town competes for employees.
SUPPLEMENTAL INFORMATION
Attached are chapters from two books on compensation management that describe practices used by the Human Resources staff.
See particularly pages 619-620 in Handbook of Human Resource Management in Government by Stephen E. Condrey and pages 94-95 in The Compensation Handbook.
ATTACHMENTS