Seven Tips for Selecting Salary Surveys
By Catherine Dovey, CCP, SPHR 1/25/10
Compensation Works LLC
Salary surveys are an essential tool for any organization. Knowledge of the market makes it easier to make good pay decisions. But there are always new and changing data sources. How can we get the most out of this important resource without unnecessary spending? Here are some tips for finding the best surveys for your organization.
1) You get what you pay for.
HR is sometimes penny wise and pound foolish when selecting survey data. For example, in a company with $10 million in revenues it would not be unusual to have $7 million going to salaries. Yet we are reluctant to spend 1/10th of 1% of those salary costs ($7,000) to acquire good survey data. To put this in perspective, imagine just one unhappy employee leaving the company because of pay inequity. Let’s face it – employee turnover costs money. The hidden cost of turnover more than balances the expense of good survey data.
2) Make good choices.
Select survey sources carefully. Look at the type of companies that participate in the surveys. If it’s not clear which companies are included in the survey data, skip it. It’s important to be able to explain the focus of the survey. (For example, this survey has a small manufacturing company focus, a large high-tech focus, a regional cross-industry focus or national data compilation adjusted by geographic indexes.) Without an understanding of the focus of the survey, it’s difficult to understand if the data aligns with your organization’s strategy. Surveys that include your direct competitors for talent are preferable to large national surveys that capture data on companies you don’t compete with.
3) More is better for cross industry jobs.
Compensation professionals like to have three to five data points for each benchmark job. Using a single data point for cross-industry benchmark jobs can result in a pay structure that is overstated or understated by 10% or more. You should utilize good data from multiple sources. This helps validate the analysis work you are doing and minimize the impact of survey outliers.
4) Be consistent about which surveys you use each year.
Using the same survey from one year to the next enables you to see how the organization’s pay competitiveness is changing over time. Switching from one survey source to another and then back (especially when only one survey is used) can skew your results significantly year over year.
5) Understand the reason a survey is published.
It’s very easy to publish an “average pay” number. Anybody can do it and there are no minimum level of data or processes required. Many of the surveys that come out have a hidden reason for collecting data. Look at who is conducting the survey and who is providing the data. It’s preferable to have data that can actually be validated by a payroll or HR department rather than having individuals provide data based on their memories.
6) Customize to your industry.
There is survey data available on nearly every industry segment. Many times you will find survey data from specific business associations, such as credit unions, college professors, non-profits, retail stores, animal laboratory staff, or organ donation organizations. These surveys are often very reasonably priced.
7) Customize to your specific project.
Use specialty data surveys for sales compensation programs, executive compensation programs and equity plans. These surveys typically capture details not available in a standard survey, such as short-term incentives, long-term incentives, and perquisites for executives. Sales surveys typically include base pay, target pay at risk, total target compensation and actual total compensation. Equity surveys will show the number and value of shares offered at hire as well as annual awards. International surveys must be used when pricing jobs in other countries. International surveys can appear expensive, but short cuts based on US data can create huge long-term pay problems.
If you need ideas on where to get surveys that are appropriate for your organization, contact Compensation Works. They’ll help you spend your salary survey dollars cost effectively.
Compensation Works LLC helps organizations get the most from their biggest expense: salary costs. www.compensationworks.com
Human Resources Expert at HRMToday.com