Salary surveys: Compensation for employees
Salary surveys collect information about employee salaries and benefits across different industries, regions and jobs. These surveys serve as benchmarking tools to enable companies to make informed business decisions about compensation.
Credible salary surveys are valuable in any economic environment. They provide statistical insights into the markets in which you compete for employee skills. A thorough analysis of your skills market will allow you to maximize the return on investment (ROI) of your compensation programs. Such market intelligence can protect your startup from paying either too little or too much for skills, which is key in any industry.
Salary surveys help you understand your strengths and potential exposures
Startups can use salary surveys to help understand their strengths and potential exposures with respect to compensation—competitive salary and benefits. By reviewing all of their employees’ salaries against the benchmark data, startups can identify low salaries and makes plans to correct this.
Without reviewing your jobs against the market, retaining employees can become an issue. If staff feel their salary is too low, it can diminish motivation and commitment. This in turn can lead to employees leaving the company or reducing productivity.
Referring to compensation survey data can help you justify and communicate difficult business decisions and create a sense of fairness. This can help motivate your employees, as they will be able to see the diligence undertaken with compensation decisions and may be more likely to actively support your startup.
As your business grows, surveys can help an organization benchmark themselves against their desired compensation position within their relevant skills market, ensuring their ability to attract and retain key staff. Regular market analysis will help bolster employees’ confidence in the organization’s compensation decisions.
Identifying credible salary surveys
While much free market data is available on the web and through other media sources, the most credible data is produced by reputable consulting firms. When using a compensation survey, it is critical to understand how the statistics were established in order to ensure the data is valid, meaningful and defensible.
The following chart outlines some of the differences between free online compensation sources and those from reputable consulting firms:
| Web surveys | Traditional surveys | ||
| Data source | Ad hoc anonymous web submissions | Complete sample submitted by organizations | |
| Geography | Varies | Global | Regional/local |
| Typical participants | Unknown | Defined list of global multinationals | Defined list of regional companies |
| Benchmarking accuracy | Titles entered by participants; no job descriptions | Each job family and job level is clearly defined | Each job family and job level is clearly defined |
| Price | Free or individual reports: $220+ -Subscriptions: $2,000 to $3,000 |
Subscriptions: $5,000+ | -Individual reports: $100+ -Subscriptions: $1,200 to $3,600 |
| Number of countries represented by participants | Varies | 15+ | 1 |
| Typical company size | Unknown | 500+ | 20+ |
| Submissions per year | Unknown—depends on how many times an employee enters their salary data | 1 | 1 |
| Integrity/ quality assurance |
-No follow-up with individual -High-level statistical review |
-Job matches reviewed -Thorough statistical review conducted |
-Job matches reviewed -Thorough statistical review conducted |
Note: Traditional surveys collect full distributions of data directly from organizations.
Where resources permit, two sources of data are recommended in order to make accurate assessments.
Narrowing down the choice: Pick salary surveys that are right for your startup
To further assess industry compensation surveys and choose an appropriate source to inform your pay decisions, consider:
- How many organizations participate in the salary survey and are these organizations appropriate comparators? (Think about their skills, industry, size and region)
- How does the survey organization protect confidentiality?
- Will the survey organization share the methodologies and validation processes being applied to ensure data integrity? (E.g., job matching based on content and scope, not title; statistical calculations; validation steps; number of job matches)
- Can you preview a sample of the data to assess its ease of use and value?
- How often is the data produced? Does it fit your planning cycle?
- Can you preview the detailed job descriptions before signing up to ensure sufficient job matches? (Remember that it’s unlikely that you will match every internal job to a single survey source)
- Does the survey organization provide personal assistance with job matching or data interpretation?
- Does the salary survey explore more than just base salary? Does the survey organization offer broad statistical calculations to assist with understanding the distribution of the data?
- Does the survey look at the prevalence and structure of human resource programs, such as stock option or bonus programs? (This can yield critical strategic insight into market trends)
- Can you participate in the survey design?
- What purchasing options are offered and at what price?
Taking the time to think through the above elements will help you conduct a qualitative cost/value analysis to determine which surveys best fit your needs.
Bear in mind that a salary survey investment is negligible in comparison with the loss of one senior professional, which can cost thousands of dollars of costs in recruitment expenses and lost productivity.