WCBC’s Steps To Age Market Data
Western Compensation & Benefits Consultants (WCBC) provides a practical framework for adjusting compensation data to reflect current market conditions, a process known as aging market data. This article outlines a clear, step-by-step approach to accurately age survey results, helping organizations make informed decisions even when working with data that may be several months old.
If you prefer to watch the video – you may find this available below.
Step 1: Identify the Effective Date
Every reputable salary survey includes a salary effective date, when the data was current and valid. WCBC’s surveys use July 1st as the effective date as the data is collected between February and July each year. Understanding this date is crucial because it serves as the baseline for aging calculations. Without it, any adjustment would be hypothetical.
Step 2: Calculate the Time Difference
Now you need to calculate the time difference between the salary effective date and the date you intend to use the data. This is sometimes referred to as advancing or trending the data forward.
For example:
If the effective date is July 1st and your company adjusts salaries on November 1st, you’ll need to age the data by 4 months. This step quantifies the time gap and sets the stage for applying market movement adjustments.
Step 3: Determine the Annual Market Movement
Next, determine the annual market movement, which is the projected rate at which salaries are expected to increase. WCBC and other providers publish Salary Increase Surveys that offer these projections.
However, not all projections are created equal. Generalised figures like “2% increase across Canada” may be misleading. It is important to consider the following:
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- Position Level: Executives may receive different increases than clerical or hourly staff. Knowing projections for each group—managers, professionals, unionized roles—can make a big difference.
- Geographic Location: Canada’s vast geography means provinces may experience different economic conditions. Urban vs. rural areas also show variation.
- Economic Sector: Salary trends may differ between private sector companies, public entities, and not-for-profits.
- Industry: Healthcare, retail, finance, and manufacturing may each have unique compensation dynamics.
Step 4: Calculate the Aged Salary
Now that we have the necessary data to input, we can calculate the current compensation levels. To do this you simply calculate the time difference between the salary effective date and the target date, then multiply the annual market movement. And lastly, you multiply the July salary by the ageing factor, in this case, 0.8%. Below is a test case to show you an example.
Test Case
Position: Receptionist
Base salary: $42,000
Effective date: July 1st
Target date: November 1st
Annual market movement: 2.3%
Time to age: 4 months
Formula
Aging Factor = (4 / 12) × 2.3% = 0.8%
Aged Salary = $42,000 × 1.008 = $42,336
This final step ensures your compensation figures reflect current market conditions with precision.
Best Practices for Aging Data
Salaries are always changing and fluctuating. If you don’t have the budget to purchase salary surveys every year, you can age the data to keep it relevant. However, as a rule, if your data is more than 2 years old, aging will be much less reliable.
Here are some best practices to keep in mind:
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- Use a consistent and reliable source for salary increase percentages.
- Apply the same percentage increase across all job categories unless more granular data is available.
- Update aged data regularly to maintain accuracy.
- Consider regional economic factors that might affect salary trends.
- Validate aged data against current market conditions periodically.
Looking for Salary Data?
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