“When an actor comes to me and wants to discuss his character, I say, ‘It’s in the script.’ If he says, ‘But what’s my motivation? ‘I say, ‘Your salary.'” Alfred Hitchcock
Whether or not you agree or disagree with the famous late movie director, when it comes to money, employees today wish to be paid at a level commensurate with internal and external job value in line with a company’s compensation philosophy or strategy. Disgruntlement leading to disengagement may occur when people perceive they are in some way not being paid fairly for what they do.
Before organizations can determine proper pay for the type and level of work being performed by their employees, they first need to formulate their pay strategy and understand the market. Today’s focus is on the salary market.
Part of my job as a compensation consultant is to help clients understand external pay and pay trends, enabling their ability to make knowledgeable decisions on establishing effective salary programs in accordance with best practices. At the ground floor of such an endeavor, published salary surveys are a necessary tool to complete this task.
February is the month when salary surveys begin to open for participation. I would guess that many of you have already received communications from the survey companies. A plethora of surveys exist, with many being expensive. You should look at salary surveys as an investment but as with all investments, you want to get the most for your money. So before buying anything, you need to keep in mind some considerations. Below are some items on which I advise my clients regarding salary surveys. While there are other considerations, the below list is a good start.
Select salary surveys that…
- are published by reputable companies in the business of doing surveys. Some better known and well-regarded surveys include but are not limited to: Willis Towers Watson, Compdata Surveys (salary.com), Mercer, Culpepper and Economic Research Institute (ERI);
- are in line with your industry or is a comprehensive general industry benchmark survey providing data by different industries;
- comprehensively covers at least 70% of all your jobs or similar type jobs;
- report data results by salary averages, weighted averages and percentiles for base and total cash compensation (base + bonus + incentives);
- segment the data by geographic areas including region, state and/or city; and
- report results by company revenue, operating budget size and/or number of employees.
To save money, I encourage you to also participate in the surveys you identify for purchase. The amount of money discounted (participant vs. non-participant rate) can be substantial. Plus, the more participants in a survey, the more representation and reliability of the data.
Another salary survey source you may wish to consider are industry associations. Check to see if you belong to an industry association that conducts and publishes a salary survey. While these surveys are typically not at the same level as those published by the professional survey houses, they can provide good market data for your industry and area at a significantly lower cost.
Select a minimum of two surveys from different publishers to help you gain a better and more comprehensive understanding of the salary market.
Another way to obtain data is for different companies either from the same industry, geographic area, or with other common links, pool together and hire a reputable third party who specializes in compensation consulting and surveying to conduct and publish a salary survey. Hiring an independent compensation company can be pricey. However, since costs would be shared equally among all participants, the price tag becomes more reasonable per company.
The one thing you SHOULD NOT DO is contact other companies on your own and openly share salary data. Such practices are in potential violation of antitrust laws in accordance with the Department of Justice (DOJ) and the Federal Trade Commission (FTC). These practices are viewed to potentially lead to wage-fixing and non-poaching agreements which are against the law. To learn more about this topic, access human resources and legal source sites.
Whether your company is for-profit, non-profit or a government entity, I highly encourage you to participate in salary surveys. Use the data to help you better understand the market and better position yourself so you may successfully attract, retain, motivate, and engage employees as well as potential employees.
If you wish to learn more about salary surveys along with delving deeper into the world of compensation, enroll in the HR Hotline Associates Compensation Essentials I and II workshops. The workshops are fun and engaging and have been overwhelmingly well-received. We will hold two workshops in April and May virtually and again in September and October in person.
To stay up-to-date on HR Hotline Associates compensation and other workshops and webinars, follow our page on LINKEDIN or visit https://www.hrhotlineassociates.com/.