Conjoint analysis for evaluating and determining flexible pay packages: analytics in total rewards

Abstract

With the increasing “War for Talent”, organizations are trying to come up with the ideal pay plan that is mutually beneficial to the company as well as employees. However, not many have been successful in doing so, while some are lagging behind due to the ignorance of the cost and benefits of investing in HR analytics. In this paper we have applied conjoint analysis, which is primarily used in marketing for new product launches in the analysis and determination of total rewards. The purpose is to determine the parameters MBA students look for in a job offer on campus and strikingly we have found some key insights which could aid the industry in formulating pay packages for fresh recruits. An exploratory research has been conducted and preferences of 152 MBA students have been taken into consideration for arriving at the conclusion. We have considered CTC, fixed component & ESOPs and tried to understand the pattern of selection of a package where trade-off has been done between these three parameters. The procedure for conducting this analysis can be used by organizations for determining packages that provide maximum utilities to employees at the same cost.