Considerations with Salary Compensation surveys

by on June 25, 2009 · 0 Comment POSTED IN: HR Info Center

Know what you’re looking at when reviewing Salary Compensation Data

When considering market data and salary compensation, there are a number of considerations that should occur. Think about if the companies that respond are similar to your organization. If you’re the hundred million dollar company, probably doesn’t make sense to have a survey that just includes ten billion dollar plus organizations. Those are not similar organizations.

Sample sizes are a critical component; how many organizations responded?
If you have a small sample size, and we have five participants for a particular job, do you really want to base your salary compensation practices on the assumption that those five are paying market competitively? Probably not.

It’s much better to have an exceptionally robust sample size, maybe a hundred organizations or more. By the time you start looking at the median in different percentile, it’s going to tend to work itself out.

Stable respondent-based data can be critical when looking at trend information.
There’s one survey in particular that’s notoriously generated on a quarterly basis, but their sample size is completely different from one quarter to the next. So, running a trend from quarter the next is literally meaningless. If we have a stable respondent-based, it gives us the ability to look from year to year, quarter to quarter, whatever it is and identify trends in salary compensation.

Most salary surveys are conducted on an annual basis and that can be important. There’s some surveys out there that only come out every two years. And so, it can be difficult to get real meaningful information because they simply don’t come out often enough.

The two most critical points in my estimation when considering a salary survey data. The first is the class benefit analysis. Salary survey data is exceptionally expensive. For most medium-sized organizations, you’re going to be looking in the $30,000 to $50,000 range in order to get really credible salary compensation data.

Along with that cost-benefit analysis is the scrubbing methodology. And the reason that those two are intertwined, they’re both critically important. But they’re intertwined because typically, the better the scrubbing methodology the more expensive the data is going to be. It’s not an absolute truth, but scrubbing the data takes time and it’s an expensive process.

Self-reported data that’s not scrubbed is an unreliable data source.
Reliable data is not only scrubbed, it typically comes from major consulting firms. There’s some organizations out there that focus exclusively on conducting salary surveys. From a scrubbing perspective they ensure that all of the data are pure. It’s employer-reported through identifying outliers. Unreliable data tends to be the web-based data that you get for free. You never know what you’re getting from some of those things. So, not only relying on the expertise of the surveying company. But also, doing your own checks is highly recommended.
Edited Remarks from “How to Set Pay Ranges That Are Fair and Effective” by Ed Rataj

Leave a Reply


Request a Free Demo

We'd love to show you how this industry-leading training system can help you develop your team. Please fill out this quick form or give us a call at 877-792-2172 to schedule your one-on-one demo with a Rapid Learning Specialist.