As of this writing, the AirComp Calculator has provided compensation data to thousands of clients, including aviation managers, compensation personnel, and individual business-aviation professionals. Since the Calculator’s output depicts the various types of compensation in percentiles and ranges, as depicted in Figure 1 below, I am often asked for my guidance on which percentiles to target and how the ranges at each percentile level should be used. In the paragraphs that follow, I’ll try to provide that.
As a brief review for those of you who are unfamiliar with the Calculator’s methodology, we pull values for a given position, in a given weight class of aircraft from multiple scientific compensation surveys, then we age and regionalize each value using both internal survey correction factors and data from the U.S. Bureau of Labor Statistics (BLS). The result of this process is the market composite average (MCA) at each of the percentile levels.
What Do Percentile Levels Mean?
Percentiles are used to group data in a meaningful way and it’s less about the actual value of a data point and more about where it lies in the dataset. In Figure 1 above, the MCA of the 10th percentile, $200,238, represents a point where 10% of the values in the dataset are lower, and 90% of the values are higher. Correspondingly, the MCA of the 75th percentile range, $329,027, is a point where 75% of the values in the dataset are less, and 25% are more. The MCA of the 50th percentile range, $284,388, is also the median value in the dataset, which means that half of the values in the dataset are higher, and half are lower. In the compensation business, we like the median more than the mean because the median isn’t affected by outlying values on either the high or low side of the dataset.
Targeting Percentile Levels
Which percentile level do we target for pay? That’s a function of the organization’s compensation philosophy. Certainly, no organization would intentionally target the 10th or 25th percentile ranges if it wanted to pay competitively. Many organizations target the 50th percentile because they want to pay “at market,” and the 50th percentile range represents that level. Other organizations pay at the 75th and even the 90th percentile ranges because they are keenly focused on retaining personnel and are willing to pay above the market rate to keep them. In light of the very dynamic personnel market we’ve had in business aviation over the last several years, I have consistently advised clients to pay at the 75th percentile in order to stay ahead of the market.
Using Pay Ranges
In order to help the user visualize the different percentile levels, the AirComp Calculator generates a range at each level that is 90% to 110% of the MCA. This is a range spread of 20% to 22% depending on the formula used to compute it. This is not the only range spread applicable to positions analyzed however, Range spreads in base pay structures can vary considerably depending on the level of a position in the organization as shown in Table 1.
| Position | Range Spread |
| Service, production and maintenance | 20% to 30% |
| Clerical, technical and administrative | 30% to 40% |
| Professional and supervisory | 40% to 50% |
| Managerial and executive | 50% or more |
Now, once we decide which percentile range to target and how large the range spread will be around the market composite average or midpoint, we have do decide where in that range we will pay our employees. Or if we’re on the other side of that equation, where we think we should be paid. In the pursuit of my Certified Compensation Professional credential, I’ve taken several courses on compensation subjects and recently came across the charts that appear below. I’m not sure I’ve ever seen better depictions/explanations about the use of pay ranges.
There are two ways to approach where in the range to pay, one approach uses career stages and the other uses proficiency and time.
The Career Stages approach targets pay levels based on where an employee is in his/her career. Obviously, the organization must establish expectations for the different levels. An example of those levels and expectations might be:
- Newly type-rated captain (does not fully meet standards) – little to no experience in type or class of aircraft;
- Emerging (meets standards) – proficient in aircraft and gaining experience; trusted to operate aircraft with company personnel only;
- Established (exceeds standards) – proficient and experienced in aircraft, demonstrating desired competencies and behaviors; productive; using sound judgment; mastering functions, serving as a mentor;
- Expert (consistently outstanding) – highly experienced; may be serving in an informal leadership role; consistently exceeds standards over an extended period of time.
The proficiency vs. time approach weighs an individual’s performance at their job with time on the job. Notice that in this approach shows that it is possible for an employee to remain with an organization many years and perhaps never meet standards or perhaps meet but never exceed them. There are two key decisions here:
- How far should a particular performance level take an employee into the range?
- How long should it take?
Hopefully, these few paragraphs have enabled the reader to understand a little more about the use of percentiles and pay ranges and perhaps demystify the compensation process somewhat. As always, I’m available for clarification and discussion at [email protected].
Bibliography
World at Work. (2021). Base Pay Administration and Pay for Performance. Phoenix: World at Work.
