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Featured Article: Compensation Surveys
|Overview: What are Compensation Surveys?
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.
Job-match vs. Points-based
Challenges in Using a Compensation Survey
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: