If you are wondering what to pay for special jobs that seem to be unique in your organization, you are in good company.
It is a challenge deciding what to pay for that distinctive job that seems to exist nowhere else. Underpay and you risk losing a key person or attracting no desirable candidates. Overpaying wastes money and risks internal inequity and employee trust problems.
Pay information is often scarce or expensive. Surveys are useful, but good ones are costly, and may not have a match for your specialized job. Free public information, usually on line, is available. As usual, you get what you pay for.
Dealing with the problem step-by-step is the most reliable approach. First, you must know the job you are trying to price. This means a job description. There is no need for a multi-page analysis that consumes days and aspirins - but a statement about why the job exists, and a bulleted list of the things the job must deliver will help you determine what to look for in the external market data. Whether you are going to do your own research, or ask a compensation specialist, a good understanding of the job is essential.
The next step is finding sources of information. Some larger companies participate in surveys sponsored by large consulting firms. These surveys are usually excellent - they are well managed, data cleaning is careful and accurate, and the results are easy to use. Ideally, a company would participate in 2-3 such surveys, but at a significant cost in time to submit the data and money to purchase the results. Often, consulting and survey firms will provide access to data on a per job basis, for a fee.
A second useful source for information is a search consultant. If you are hiring for that unique position, your search consultant will provide an estimate of what you should expect to pay. These estimates are based on their current experience. They need to be taken with care, since the search consult wants to place a candidate quickly and easily, and they are normally paid as a percentage of the base salary. Estimates can lean towards the high side.
When there is sufficient data available, it is useful to triangulate. This simply means using at least three data sources, and taking the average. It also means taking a close look for consistency. The closer the sources are, the more likely it is that the estimates are good. Large deviations mean looking more closely.
However, none of the surveys or other sources ever seems to have information about your unique job. When accurate matches with survey data are not possible, it is useful to look at related jobs.
Look for jobs that either have responsibilities that partially overlap with your job, or are at a similar level or have a parallel in another function. The closer to your job the better, and some judgment is always required. This is where a reliable job description and a solid understanding of the organization are very important.
The third step is to combine the available information. With luck and diligence, there will be more than one source of data. Some judgment will be required to weight the various sources, perhaps adjust the data to reflect larger or smaller jobs, and maybe adjust the data for time and inflation. At this point averages are calculated, producing a result.
The last step is to stand back and understand the context. The information is always an estimate and has built in statistical margins. There can be reasons to pay more or less than the average salary calculated by this process. For example, you may want to pay higher or lower than the market, depending upon internal equity and the attributes the individual brings to the table.