Finding Your Target Market

Use Custom Cuts to refine the survey to meet your needs

When we assist clients in analyzing their market position and creating or updating their salary structures, one of the first questions we ask is “Do you have a well-articulated compensation philosophy?”  If the answer is no, we recommend developing one as a first step, since your philosophy will dictate how to conduct your market analysis.

Now, if you already have a compensation philosophy, it probably contains a statement about your desired market position; usually, the 50th percentile of “the market.”  But your market percentile is only half of the equation.

There are multiple markets

Within the international development sector, there are multiple actors.  Non-profit NGOs play a key role, but commercial development contractors, bilateral development cooperation offices and of course, donors play a big role as well.  And within any given country, there are a lot of different organizations working in a variety of programme areas.  Don’t overlook private sector companies  – you’re competing with them, too.

How can you decide the right comparator group for your organization?

Considerations for selecting comparators

It can be a challenge to select the right comparators for a market analysis, but it is one of the most critical steps to follow.  Your compensation philosophy should provide the necessary guidance. Here are some questions to consider:

  • Is your compensation program job-based or person-based?
  • Are you a project-based or career-based organization?
  • From where do you recruit your best talent?
  • To which organizations do you lose talent?
  • Are you competing with the same organizations for all staff, or are there differences by employee category (e.g., manual support, specialized support, professionals, and leaders)?
  • If your organization is global, is there a core group of organizations with whom you compete in substantially all your markets?
  • Are there key organizations with similar missions or areas of focus to yours?
  • What about organizations outside your sector, such as donors or private sector companies?
  • Remember consistency from year to year is also important. Sustaining Partners and Sustaining Contributors are the most likely employers to consistently appear in our surveys over many consecutive years.

Does it really matter so much?

In a word, yes.  The NGO Local Pay survey conducted by Birches Group has grown dramatically over the past few years.  The chart below shows the total number of surveys conducted and the number of large surveys.  Thirty-two percent (32%) of all surveys are over 30 participants.

Data as of Cycle Two, July, 2017

Consider the example below for an NGO in Uganda.  The first chart shows the range of the market for the full survey sample in Uganda, where the survey includes 69 organizations:

If you targeted the 50th percentile of the market in Uganda, the range represented above would be your benchmark.

If you looked at just 17 comparators that you identified as important to your organization, based on criteria like the ones listed above, the 50th percentile of “your market” would be quite different:

In fact, the selected group at the 50th percentile is on average, 11% higher than the 50th percentile of the overall market.  It follows that if you used the full survey for your market analysis you might fall short of where you really need to be to attract and retain the best talent.

Another alternative clients often consider is adding donor organizations or private sector companies into the mix.  These employers are often more competitive in the market and can be useful benchmarks, particularly to attract people to positions that are not NGO-specific, such as admin and finance roles.

What’s the solution?

We believe that in all but the smallest markets, it’s critical for organizations to answer the question “Xth percentile of what”?  You need to establish criteria for selecting the most important comparators for your organization, and possibly reflecting a global standard as well.

Birches Group offers custom cuts for our clients upon request.  You probably already know who the best comparators are for your organization, but we are happy to assist you based on our experience with others, and our overall knowledge of the market.  The cost of a custom cut is $400 per country ($200 for Sustaining Partners and Sustaining Contributors).  Each custom cut applies to one cycle of the survey (April, July or October).

For more information, please contact the NGO Engagement Team.