There are a lot of vendors that collect and aggregate compensation data into salary survey products for employers to purchase. And I often get asked, “What makes a salary survey good?”
Here is a list of criteria I think about when determine which salary surveys to purchase:
1. The salary surveys provide HR-reported and not employee-reported data.
2. The list of participating employers includes enough of your competitors that you believe the data will represent the external market well. AND there is stability in the participating employers so last year’s data can be compared to this year’s survey results.
3. The data is statistically reliable and valid.
4. The salary survey results are updated on an annual basis or more often. The methodology from time period to time period is consistent.
5. There are survey job descriptions you can compare to your employer job descriptions. This requires the survey job descriptions to have enough detail so that you can make good match decisions. Example: Reports to “insert job title.” And I like details so I understand the distinctions between job levels. (You don’t want to match by job title alone.)
6. The data for base pay and incentives is aggregated in a way that you trust the published numbers. Does the aggregate incentive number include zeros? Is it a target or actual payout incentive number?
7. The number of companies and employees represented in the aggregate data is large enough that you can’t identify the pay of a particular company. Don’t use or purchase salary surveys that list compensation for a job by company.
8. The data is more than 90 days old.
9. No one company represents more than 25% of the data.
10. The salary survey results can be reported below the “All Industries, All Locations, All FTEs” level. For example: You can review the data by location at the country, state, province, territory, region, metro area, city, and/or zip code level. You can also review the data by industry and company size. Company size can be based on annual revenue, value of assets managed, number of full-time equivalent employees or FTEs, and/or annual budget.
11. If the vendor is reporting compensation data based on regression and not actual company/employee data, they disclose this explicitly. There is no hiding behind legal or statistical jargon.
12. Cost: Some vendors charge a lot for their salary surveys and some don’t. But every employer has a budget they need to consider. So, what are the best salary surveys that can be purchased within the budget? Ideally, you want 2 - 3 surveys for your compensation benchmarking project.
What is missing from this list? What do you look for when you are researching quality salary survey data to purchase?
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