Webinar Recap: What’s New and Next in Comp Data?

From new legislation and record-high inflation rates to the rise of artificial intelligence (AI), the world of total rewards is undergoing some truly massive changes. Since data offers a snapshot of reality, it’s no surprise those shifts are reflected in the world of compensation data as well. 

Last month, I had the honor of hosting a WorldatWork webinar, “What's New and Next in Comp Data” featuring some of the leading voices in our industry. 

Our speakers, Ephraim Edelman of Aon, Heather Ryan of Mercer, Sambhav (Sam) Rakyan of WTW, and Yanina Koliren of Korn Ferry shared their insights on the current and future state of compensation data, offering both clarity and practical takeaways for comp pros navigating this dynamic landscape.

Here are some of the main highlights from this enlightening discussion: 

Context is key for effective compensation programs

These days, it’s no longer enough for comp pros to look at pay in isolation. Having additional context and an efficient way to make sense of it is critical to making strategic and timely decisions. This shows up in 3 key ways: 

1. External factors can’t be ignored because context is critical to understanding how compensation works. As Yanina explained, comp pros are essentially becoming “economists for the country that they are responsible for…because just looking at the compensation itself tells you very, very little.”  
2. Compensation is transitioning to Total Rewards. With economic impacts on businesses and employees, companies are leaning on comp pros to deliver win-win solutions. Yanina highlighted that in addition to base pay and bonuses, comp pros are also working closely with their benefits team to “optimize that full package and get the best ROI for both the employee and the employer.” 
3. Data is in demand. Companies are upping their survey purchases and supplementing with alternative sources of data to gain a clearer, more complete picture of the market. The same company that used to buy 1 survey now buys 3, while the ones that bought 2-3 surveys are now buying 4-5 and an alternative data source. Companies that bought a dozen are now buying 40…the quest for good data is only increasing.

AI has the potential to reduce a lot of the friction we see in compensation market pricing today

Regardless of our personal feelings on the topic, AI is already here and starting to shape the future of compensation. Heather pointed out that currently, the primary focus is on leveraging AI to replace repetitive tasks, and ultimately “pull friction out of that whole highway of compensation data usage.” This includes streamlining of many processes from collecting and cleaning data all the way to creating and analyzing data sets. 

The presence of AI doesn’t mean that comp pros will suddenly find themselves out of jobs. However, it does suggest that the responsibilities for comp pros will be evolving. As Heather explained, those previously tasked with routine work will now have the opportunity to oversee and refine machine learning models.

Sam also emphasized two skills that are expected to be highly valuable as a result of AI development: "You should be asking very good questions. You should be very focused on the business mindset." Essentially, it’s about being able to effectively prompt AI and use it to your advantage, so you can focus more time and energy on developing skills as a strategic partner. Sam suggested that just as we have HR Business Partners today, "Compensation Business Partners” will soon become a more prevalent role.

There’s a lot to be excited about, but AI definitely has its limitations. Sam called out an important point that “the best AI is going to be underpinned by the best data.” Ephraim offered another spin to this and highlighted the impact that AI will have, not just on compensation data, but the workforce itself and how it may change the way we define jobs. AI is revolutionizing the way we work, enabling us to process information and operate more efficiently than ever before. Those who learn to leverage AI to help them be better at their work will become more productive overall.

There is a future for alternative data but not as a replacement for traditional survey data

The increasing need for more context, paired with technological advancements, has led to the emergence and growth of alternative data sources. 

Our panelists discussed a variety of data sources with differing levels of validity and accuracy. Unsurprisingly, though with good reason, the consensus is that survey data remains the gold standard for compensation programs. That said, there’s definitely a place now and in the future for alternative data. Examples include Compa, levels.fyi, and many others.

As changes come thick and fast in compensation and talent, companies are looking for ways to stay ahead of the curve. Diversifying their data sources is a great way to get another layer of validation and more timely insights as the market moves. Doing this the right way means creating a comprehensive data strategy that includes alternative data sources alongside traditional surveys.

Data providers have a duty to meet changing demands of the workforce responsibly

The current landscape has sparked a demand for more frequent and more forward-looking data. Data providers, new and old, bear the responsibility to meet these evolving demands responsibly. What does this look like? Ephraim outlined a framework that dives into three key areas: data-privacy, antitrust, and pay transparency. Each of these key areas can fill a dissertation on its own but here are some of the highlights Ephraim offered: 

• Those distributing data have a responsibility to create products and uphold a space that promotes pay equity and prevents collusion.
• Companies have a responsibility to be transparent with employees about how their data is being used, and data collectors have a responsibility to understand and uphold privacy laws. 
• When it comes to compensation, there is a lot of discussion around staying competitive and attracting talent but it is just as important to make sure the internal consistency and equity holds together as well. 

There are a lot of new regulations, varying in both degree and complexity across regions. It can be a lot for comp pros to keep up with. In this climate, Heather emphasized the importance of working with survey providers that are transparent with how they are addressing and adhering to these regulations. Your survey provider(s) should be helping you understand and navigate the landscape instead of just being purely transactional. 

Candid advice from our panelists

To wrap up the webinar, our panelists shared valuable insights for organizations looking to leverage compensation data and stay competitive: 

1. Consider different perspectives and have some flexibility. This means, don’t just look at the 50th percentile or the median. It’s more important to understand your compensation philosophy along with how that fits in with the breadth of what’s happening in the market.
2. Have your compensation strategy and determine whether or not you have the data to support it. Strategy without data isn’t actionable, and data without strategy is just numbers.
3. Peer groups have changed overtime but most organizations have yet to review and update them. It’s important to know where you are hiring from and where you are losing talent - whether it’s a particular function or location.
4. As more and more teams hire internationally, it’s becoming increasingly crucial for organizations to have a compensation strategy that is globally consistent but also locally relevant. This means ensuring upholding pay equity across your organization while adapting to local legislation and market conditions. 
5. Top talent is expensive and not everyone is going to be able to afford it for every single role in the organization. It’s essential to identify your critical roles so you are clear on where to focus your investment. 

Over the next few years, we can expect to see an influx of new regulations, technology, data sources, and vendors — probably more than we can even imagine today. This rapid pace of change can be overwhelming. In these moments, the notion of trust becomes more and more crucial. This includes trust in your data, trust in your vendors, and trust in your strategy. It will be increasingly critical to work with other organizations and leaders who uphold utmost integrity and accountability, ensuring a strong partnership to navigate the changes together.