Compensation surveys collect information on pay for various jobs in different organizations. If you wanted to know what a database analyst is typically paid, then a compensation survey is how you would find out. Compensation surveys may contain information on variable pay and benefits as well as base salary. These surveys typically allow you to get “cuts” of the data, so if you were only interested in the pay of database analysts in California then, assuming that information is available, you could request that cut from the survey vendor.


Types of Compensation Surveys

Job-match vs. Points-based

• Job-match surveys have mini job descriptions (e.g. a title like Senior Clerk and a paragraph describing the job); participating companies match their jobs to those titles and share the appropriate salary information. For example, they may decide that what they call a Clerk II matches the Senior Clerk description and share that information with the survey vendor.
  
  
• Points-based surveys really mean Hay Guide-Chart point surveys, so named from when Hay was the dominant player in the compensation world. In a points-based survey, jobs in each organization are evaluated to determine job size; thus a Senior Clerk or Truck Driver or Barista might all be 155-point jobs. The points-based survey gives salary data by points, not job description. These point-based surveys are typically only relevant for users of the Hay Guide-Chart Method.

Targeted Jobs

• Each survey (and there are hundreds, if not thousands of surveys) will have a different focus. Some have information on executives, some on salaried employees and some on hourly workers. Some surveys cover many jobs and industries; others focus on a specific industry, region or job type.
  
  
• Organizations frequently buy more than one survey so they can get data on all their jobs.

Other Differences

• HR provided data vs. employee provided data. Traditionally surveys got data directly from HR managers; now, thanks to the Internet, some surveys are based on data submitted by employees.
  
  
• Club surveys vs. open surveys. Many surveys require that you participate and share your salary data to get the report; these are called “club surveys.”
  
  

Challenges in Using a Compensation Survey

• Being clear about your goal. The obvious question of what survey to buy should be postponed until you have answered the question of what you want to use the survey for. Which jobs do you need pay data on? Who are you competing for talent with? (There is no point looking at national data, if all your hiring is local.) Do you need industry-specific data? Do you need detailed total compensation data or just base pay? Once you know how you intend to use the data, it will be easier to select an appropriate survey.
  
  
• Interpreting the information. Interpreting the information takes some skill. A survey may contain information on top quartile pay, median pay, average pay, and other data points. The range of pay for a given job may be so large as to leave you feeling that you have little guidance on what is right for your situation. Interpreting the data takes skill. Remember, surveys give data, not answers; it takes some expertise to derive an appropriate answer for your organization from the data.
  
  
• Note, also, that several surveys will better cover all your jobs and provide increased confidence that the data is correct. Having multiple surveys is wise but adds a layer of complexity. You will have to reconcile data, which may be presented quite differently or give apparently contradictory results.
  
  
• If you are not experienced in using compensation data, then hiring a compensation consultant is a good idea.
  
  

Guidelines in Choosing a Survey Vendor

As mentioned, in the US alone there are hundreds, even thousands, of different compensation surveys. HR consulting companies, industry associations, job boards and businesses specializing in compensation surveys can all produce compensation data. Sometimes an HR manager will contact a few peer companies to share salary data and produce a small but focused compensation survey. Here are some guidelines for choosing a vendor.

1. Credibility of the survey The most important factor is the credibility the survey will have with stakeholders (e.g. top management, managers, employees). Stakeholders may aggressively question the compensation recommendations made by HR. They will often have their own survey data to “prove” your data is wrong. HR has to be in a position to show that the survey data they used is completely credible and, furthermore, more reliable than information other stakeholders may present. Credibility is closely related to quality, but it is important to make a distinction. The quality of the survey is based on the expert opinion of a compensation professional; the credibility of the survey is based on what your stakeholders happen to think. A survey with fantastic quality but poor credibility is not useful. Credibility can be assessed by looking at: • The reputation of the survey provider. Simply imagine what you would say to your stakeholders about the survey provider. Would they be impressed or not? • The organizations that participate in their survey. This is precisely the same criteria as for reputation. If you listed the names of organizations participating in the survey, would your stakeholders be impressed? • The amount of data If you are able to show the survey has a large amount of relevant data, then it is normally more credible than a survey with a small number of participants. (The exception is that some organizations are very specific in who they compare to; for example, the major oil companies may only care about data from a handful of competitors.) • The rigor of the survey methodology If you describe the process by which the data is collected and verified, will stakeholders be impressed? The important point is that the surveys must be credible in the eyes of the stakeholders and substantially more credible than information that someone read in a newspaper, saw someplace on the Internet, or overheard about what their cousin’s friend is being paid. 2. Quality of the data Good salary survey vendors take great care in designing the survey and working with participating organizations to make sure the data is of good quality. If some data points look odd, they may call up the organization to double check the numbers. Bad salary survey vendors do none of these things and, as a result, there is no reason to be confident in the quality of the data. You can assess the quality of the data by: • Asking the survey provider to explain in detail how they handle the data and, in particular, ask them to describe the pitfalls that occur in collecting data and how they respond to those. If they don’t think there are pitfalls, they don’t know what they are doing. • Participating in the survey by providing data, while having a critical eye on where quality could be compromised. Since credibility is so important, everyone involved tends to overplay how certain the data is. Be aware that even in the best methods, there is still a good deal of somewhat subjective judgment used in job matching—still, overall the data is useful. 3. Relevance of the data If a survey covers jobs or organizations that are not similar to your own, then the results may not be particularly useful. For example, a specialized high-end retailer may find that a survey of the “service industry” or even the “retail industry” is not a good comparison. 4. Amount of data Even if a survey boasts 300 participating organizations, it may be that, for the cut of the data you look at (e.g. mid-sized service organizations) and the jobs you care about (e.g. branch managers), there is not enough data to give you confidence. Check the number of data points actually of use to you. 5. Ability to help with the interpretation While you can buy a survey a la carte, you may prefer to use a survey vendor who can provide tools or expertise to analyze the data. 6. Range of surveys offered While it is advisable to use more than one survey vendor, you probably do not want to deal with a dozen different surveys in different formats. It may suit your purpose to use just two or three vendors who can provide most of your survey needs.

Choosing a Vendor

The vendor space is comprised of a mix of organizations including background checking firms, HRIS vendors, immigration case management experts and, of course, I-9 specialists. Some of these have entered the I-9 compliance space recently after looking at the business opportunities and thinking “It's just one page—how hard can it be?”

The key in selecting a vendor is choosing someone who is able to prove conclusively that they can handle this surprisingly troublesome compliance process. Anyone who says, “It's easy; you just flip a switch” should be excluded from consideration.

Some things to look for: