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4 minute read
For many companies, market pricing is a critical process in compensation planning. It directly affects recruitment and retention, not to mention the bottom line. For that process to work effectively, compensation teams need the best possible data. Whether your company is looking for its first compensation market data or seeking to expand your panel of salary surveys, identifying the best data source for your needs is key.
Available Salary Data Sources
Salary data comes in many different forms, some more useful or accurate than others. The most common - and rigorously curated - data type is salary surveys. Surveys vary widely in the data they provide. Some are broad, encompassing a wide range of industries, jobs, and locations. Others are highly specialized niche surveys that focus on specific geographic areas, job categories, or industries.
A newer market data option is crowdsourced, aggregate data. This has typically been a reference tool for employees when negotiating salary (think Glassdoor or LinkedIn salary information), but increasingly these data sources are marketed toward companies as a low cost option. As a rule, I recommend that compensation teams take this type of data with a grain of salt. It can be useful as a supplement to salary surveys, but typically doesn’t have the statistical rigor or sufficient inputs to support its full use in your market analysis.
Salary Surveys and Compensation Program Maturity
Depending on the maturity of market pricing practices in your organization, the surveys you’ll be looking at will likely differ. If you’re looking for your first survey, you’ll more likely want one that is relatively broad, but not so broad you have a ton of extraneous data to eliminate. For example, for a business with a highly localized workforce, a local association survey, which covers a wide array of jobs and industries, but is geographically focused might be your best choice.
On the other hand, if you have several (or many) surveys, you’re likely hunting for some pretty specific data to round out your market coverage. For instance, maybe you just expanded into a new location and concluded that your survey data is insufficient to meet the need there; maybe you completed an acquisition and need more data for a new industry vertical.
Whatever your reason for needing new survey data, there are several key elements to consider to help find the survey or surveys that are right for your business.
Evaluation Considerations
When looking at different surveys, you’ll want to think about both factors related to your business as well as factors intrinsic to individual surveys. Each element is important, though the weight you give them will vary depending on your specific needs.
Business factors
Talent Competition
Your talent competition landscape is the top factor for survey selection. All other business-related factors feed into it - jobs, industry, size and geography. Remember, talent competition is not the same as business competition. If, for example, your workforce is highly localized but you work in an industry like software as a service (SaaS), you may be competing with nearby companies outside your industry for local talent as well as other tech companies who are hiring remotely.
Most surveys will provide a participant list. This is invaluable if you've come up with a list of the companies with which you compete for talent. A survey that includes direct talent competition is almost always going to be more useful than one that doesn't.
Jobs
Think about the type of jobs you want to fill. An accounting firm may be competing primarily with other accounting firms for tax and audit accountants, but they’ll still have to hire - and pay - administrative staff, marketing, IT support, etc. This means that their talent competition for core accountant jobs is likely different than for those non-accounting positions.
As you’re evaluating data sources, think of the core jobs that make your company run - whether accountants, machinists, retail associates, or software developers. Also think about your entire job architecture and be sure to have a data source or sources that provide market information for those, as well.
Geography
Geography, again, isn’t necessarily about the markets you sell into, but about the places your employees live and work. The big push into remote work over the past several years has made geography much more complex for a lot of businesses, as has the trend toward pay transparency laws requiring companies to include salary ranges in their job postings. Understanding what to pay a developer in New York City vs. one in rural Tennessee is vital for companies hiring remote employees. (For more on this, our CEO Alan Miegel has a great article on compensation for remote workforce.) Geography also comes into play when looking to expand into new markets or transition from a domestic to a global workforce.
Your data source(s) should cover all the geographic areas in which your employees live and work. Having robust, accurate market data that supports your compensation philosophy for geographic locations is crucial for effective recruitment and retention.
Industry
Your industry may be a greater or lesser factor in your choice of survey. If you’re a highly specialized business where many of your employees would be unlikely to explore opportunities outside your industry, this could be a major element in finding the right market salary data. If you compete for talent across a variety of industries, it might be of lower importance.
Intrinsic Survey Considerations
Beyond aligning with your talent competition, you’ll want to understand how the survey is structured and the methodology used in analysis. Even self-reported, crowd-sourced, or aggregate data can be useful with the appropriate methodology (though, I’d caution against using that as your primary data source, regardless of methodology).
Most companies, particularly those that are looking at their first salary survey, will need to consider cost and participation requirements. Good surveys are expensive. To help mitigate the cost - and because surveys are only as good as their input - most survey vendors will offer a discount for survey participation. In this process, you provide your de-identified employee job and compensation data to help build the base of validated salary information in the survey. It’s important you know the information your vendor will want and participation timing so you can plan effectively.
Don’t Be Afraid to Ask for Help
This may all feel like a lot, but remember that you can ask for help. It’s in survey vendors’ best interests to make sure their data is a fit for your company. You can also ask your market pricing technology partner for help in finding the right survey to meet your needs.
At BetterComp, we work directly with major survey vendors including Aon, Mercer, Culpepper, and WTW, along with many of the smaller, niche surveys to help get our customers the salary data they need. Our sales and customer success teams are well-versed in the world of survey data and we are committed to making sure our customers can find, access, and effectively use their data to market price at scale.
