Salary Data on the Internet–Is it reliable?
How many times have employees shared compensation data with you they found on the internet? How do you respond to employees who are asking for a raise based on this information?
There is a plethora of available compensation survey data sources to choose from, including consulting firms, industry and trade associations, educational institutions, and various pay surveys. No matter the source, a careful evaluation should occur to ensure that the data is reputable, relevant, and reliable.
Listed below are five considerations on using data from various sources:
1. Survey Scope: Look for surveys that cover industries and regions that are most applicable to your business, and that provide data on enough jobs to be cost-effective. The survey participants should include your competitors and peers, including who you hire from and lose employees to. However, keep in mind that a small company should not try to benchmark its compensation practices to a large corporation, and vice-versa. Also, confirm the pay elements reported in the survey contain what is needed. Not all compensation surveys capture pay elements such as bonus and long-term incentives.
2. Survey Methodology: It’s important to understand the survey methodology used. Surveys with fewer than 10 or 15 companies do not necessarily provide a good sense of what the overall market looks like. Also, any data that is self-reported by individual job holders about their own positions and compensation data may not be as reliable as data produced by a more rigorous survey collection process. Review the summary of the methodology to make sure it’s consistent with standards set forth by reputable industry associations such as WorldatWork.
3. Job Descriptions: It’s important that the jobs in the survey are comparable to the jobs being benchmarked by your organization. Be sure to compare job descriptions, not just job titles, as titles vary from company to company. For example, an accounting manager in one company might be overseeing all aspects of accounting, whereas an accounting manager in another organization might be limited to support work such as handling accounts payable.
4. Survey Bias: Using self-reported data could potentially lead to inaccuracies. The definition of what the incumbent believes constitutes “pay” can differ from person to person. No matter how you ask the question, people will often report what they feel should be their pay, or what they want their pay to be. Salary, overtime, bonuses, incentives, profit sharing, etc. are components of compensation that may be included or excluded by the incumbent depending on the compensation figure they believe is justified. Reputable survey vendors go through a calibration effort before publishing data and may challenge the reported data if something seems erroneous.
5. Data Effective Date: Check the survey data effective date to see how relevant the data is. Survey data greater than one year old should be used with caution as the data may not be representative of the current market.
It’s also advisable to use multiple survey sources. Relying on a single source can be misleading if that source doesn’t perfectly reflect the market in question.
Educating employees on this topic is an important step towards transparent compensation practices. Studies show there is clear value in an open and transparent approach to compensation. Informing employees on how the market data has been collected by your organization is a great step towards pay transparency.
Conducting a salary survey is a time-consuming task. If you are needing assistance with selecting a survey, or are looking to outsource your compensation survey submission process, please contact Compass Total Rewards at www.compasstr.com.