Being a well-versed salary survey user is an important part of managing employee compensation at your organization. After all, salary surveys are the leading source for setting pay rates.
What data should you use, and what data shouldn't you use? Why is some data lower and some data higher? Should you do a custom survey for better data? If you can't find a given job in a survey, is it okay to use internet or recruiting firm data? How many sources should you use? Here are the answers to these questions and more that we routinely get asked by employers—7 things you may not know about salary survey data.
1. Government data is conservative.
The Bureau of Labor Statistics is a great, reliable resource for salary benchmarking, but compensation analysts find it to be conservative when compared to other compensation data sources. This is because of the time frame in which it is captured, the types of organizations surveyed, and variables covered.
2. Custom salary surveys are less reliable.
Conducting a custom survey for a niche job is commonly believed to be more targeted and accurate than a larger salary survey, however these surveys tend to have lower sample sizes than expected and are not replicated regularly. Custom surveys can be good options for niche jobs and industries, but be aware of their limitations. They certainly aren't always the best option.
3. Internet comp data is generally invalid.
Not only are internet resources for comp data indefensible, but their sources can’t be verified. Research has found that these sources are highly inaccurate and comp experts raise serious questions about the data's validity. Be wary of any data found on the internet that does not publish participant names, demographics, effective dates of data, and sample sizes.
4. Use recruiting firm and job board data with caution.
Data published by recruiting firms and individual employee data (such as from job boards) tend to not be as reliable sources of information as others since they often report inflated pay rates. This information is not a good indicator of how much a job is actually paid.
5. Choosing the right survey makes a difference.
All compensation surveys cater to a certain audience. Make sure that audience fits your's. If a survey contains very large employers on a national scope that you don't compete with, it's probably not a good survey to choose for benchmarking. The wrong survey source can lead to higher or lower data, so always look at the participant list and demographics.
6. Salary data sources are shrinking.
The number of third-parties offering salary data is shrinking which means that employers have fewer sources to select from for their compensation data, though the strong ones still remain. As a result, it’s critically important that organizations support and participate in compensation surveys they value so that valid and reliable information continues to be available.
7. The magic number is “3.”
Ever wonder how many sources you need to make a good pay decision? Some sources say 2, some say 5. Comp experts agree that reliable pay decisions should result from 3 separate sources of salary survey information. Choose three surveys that make the most sense for your analyses.
To make good pay decisions, you need quality data and multiple sources of it. Reliable salary data is tough to come by these days, so be careful about what you use.