Ellen Warden, SPHR
WorkPlace Synergy, LLC
In the last issue of Business of Valuation we examined how benchmarking your firm’s positions in the market will help you know if your pay plans are competitive – if you are “in the BV ballpark”.
How do you get access to current and accurate market data to determine how much firms pay for specific positions in the BV profession?
Alternatives can range from a casual telephone call about a specific job to conducting, participating in and/or purchasing a compensation survey that uses standard, proven methods of data gathering and statistical analysis.
Employees and managers can (and do) query colleagues and job applicants and search the Internet to find free information on salaries; however, this data is often anecdotal. It may not be collected and reported in a structured and scientific manner. Internet sites and recruiting data is often self-reported and inflated leaving employees and firm leaders with a false sense of market value. Finding reliable salary data for a firm’s specialty and geographic location is not always easy.
More than 80% of business managers and HR professionals said their organizations either participate in or purchase at least one salary survey each year, based on a Salary.com poll. According to the 2011 Culpepper Compensation Market Pricing Practices Survey, third-party compensation surveys with job-specific, employer-provided data are the most common source of compensation market data by far.
When deciding how your firm should access current and accurate market data, consider the cost, time, reliability, availability, and confidentiality of the data, as well as legal issues:
- The process of collecting data and producing a salary survey takes careful planning and execution that requires economic investment, people resources, and time.
- Purchasing surveys conducted by third parties (e.g., associations, consultants, research firms) can be relatively inexpensive compared to the cost of developing the same results by oneself.
- Such surveys often have a large number of participants, thereby producing more accurate data.
- An experienced data provider in survey methods and statistical analysis is expected to put out high-quality, reliable, accurate information.
- Researchers generally collect salary data from employers during the Spring timeframe in order for the survey results to be published in the Summer and early Fall, in time for budgeting and compensation planning for the following year.
While anyone can purchase these salary surveys, what’s in it for you to participate in one?
- Participants that provide data usually receive a significant discount off the purchase price of the survey when published.
- Preparing and submitting data for a salary survey is generally straightforward. The participating firm merely matches its internal jobs to the job descriptions in the survey, and reports salary information for the incumbents in those roles. Some surveys may gather information on salary ranges and compensation policies as well.
- The quality of the survey’s findings is based on you, the participant. Simply put … the more data the vendor has, the better. Every participant improves the quality and the validity of the results.
- If your chief competitors are participating, it makes sense for you to participate as well.
- If your firm is one of a few players in a region, your participation could make a significant difference in the validity of the data.
- Your firm’s participation can stimulate others to participate, which will produce more statistically relevant numbers and improve the value of the data.
The time spent preparing and submitting data is generally well worth the savings realized when purchasing compensation survey data. However, even if your firm is not ready to take on participation in salary surveys, you should consider budgeting for the purchase of salary data that is collected, analyzed, and published by reputable firms. Then plan to use the information as the basis for setting pay levels and making salary decisions to ensure they are aligned with your overall compensation philosophy.
In the next issue of Business of Valuation, we will finish the play in the BV Ballpark and provide some items to look for if you are thinking about purchasing a compensation survey.