Criteria for Market Survey Pay Data

Criteria for Market Survey Pay Data

Today, any motivated employee can gain access to salary data from the internet which suggests, nay, proves that they are underpaid by many thousands of dollars. So how do you deal with the line of employees and managers outside your office waiting, with pay printout in hand, to discuss their compensation? Meet this challenge head-on by focusing on quality pay data and the criteria that all pay data must meet before being used in your compensation practices.

Cliff’s Rules for the Good, the Bad, and the Ugly of Survey Pay Data

Quality standards suggested for market pay data surveys to ensure accurate market analysis for your jobs.

• Survey details its methodology

The survey data provider will detail its process for contacting or soliciting participants, collecting and analyzing the data, and checking data quality and validity. A lack of transparency around survey process and method raises questions about data integrity.

• Survey data is collected from an independent, verifiable source

I would consider the Human Resources, Finance or Payroll departments of an employer to be independent, verifiable sources of pay data. Surveys based on data self-reported by individual employees are generally not used by compensation resources (they have a lot to gain by inflating pay rates).

• Survey identifies participants

Participant lists tell us if the survey data is relevant to your industry and geography. If not a list of participating organizations, there should at least be a demographic profile which outlines details such as size, location, industry, and other characteristics. If you don't know where the data comes from or who contributed it, how can you determine whether it truly represents your company's labor market?

• Survey provides job descriptions adequate for matching

Proper job matching is the foundation for accurate market pricing. The Golden Rule for wage surveys is: do not match on job title alone. Matching on job title alone is fraught with peril given the wide variances in titling practices that exist among different organizations and industries. Job descriptions should include education and experience specifications, as well as a listing of job purposes, and typical responsibilities. Sometimes it is necessary to remind employees that employers set job prices by responsibilities and requirements, not years of experience.

• Survey reveals the effective date of the data

It's important to know how current the data is so its validity can be confirmed. Given the turbulence in today’s labor market,data that is too old — regardless of whether an aging factor has been applied to bring it forward — may no longer reflect the realities of a particular job’s competitive value.

• Survey notes sample sizes

How many organizations and employees are represented in a particular data set? Obviously, data based on 200 employees is more meaningful than data based on five employees. Without this information it is impossible to determine whether a markedly high or low pay figure is valid, or simply the skewed result of a small sample size.

Not all salary surveys are created equal. When stakes are high – such as managing employee expectations and making fair pay decisions – the quality of your data is crucial. Follow these criteria and you’ll be better prepared to lead compensation discussions with confidence and clarity.

AUTHOR:

Cliff Sandsmark, CCP, CSCP, SPHR, SHRM-SCP, is a Senior Compensation Consultant and Sales Compensation Practice Leader with JER HR Group, a nationally recognized HR and compensation consulting firm. Cliff specializes in helping organizations structure compensation plans, sales compensation, market pay studies, wage analysis and compliance, and other compensation strategies. He is a contributing writer for HR Professionals Magazine and a frequent speaker on aligning compensation and organizational goals. CONTACT

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