By Claudine Kapel
Shorter days and cooler weather can only mean one thing: The release of the latest published compensation surveys is at hand.
But before you begin reviewing and considering the results, here are five tips to help you make the most of your market data.
1) Look for reliable published data. To design and manage compensation programs effectively, you need solid market data. The best compensation data comes from surveys conducted by consulting firms, the local board of trade or other organizations that specialize in compiling market information. These types of surveys collect pay data directly from employers and the reported data has been reviewed and validated.
Surveys that report data collected directly from individuals about their own pay can offer some anecdotal insights. But more formal data sources provide a more credible and defensible foundation for making compensation decisions.
2) Use multiple data sources. Compensation surveys vary in terms of the organizations and jobs represented in the reported data. In addition, the size and industry of participating organizations will also impact the survey findings.
Using multiple data sources whenever possible will enable you to compare and validate the survey findings by job.
3) Pick a meaningful comparator group. You will get the most useful market insights from surveys or sample groups that feature the types of organizations that you compete with for talent.
Ideally you want to focus on market data for organizations that are in the same or similar industry and of a comparable size. You may need an industry-specific survey to get market data for jobs that are unique to your sector.
4) Select good job matches. When comparing your jobs to the jobs in a compensation survey, you want to identify good matches based on comparable job content. So it’s important to read the descriptions of the survey benchmarks carefully and select those that best align with the jobs in your organization.
Don’t get too hung up on job titles. The same type of work can go by different titles, depending on the organization. That’s why focusing on job content is so key.
It’s also a good practice to check how many organizations reported data for a given job. The bigger the sample size the better. Pay data with a small sample size is more likely to show significant shifts year-over-year because the addition or elimination of just a few companies can greatly impact the level of the data reported. Larger sample sizes tend to be more stable.
5) Review all the data elements to glean the whole story. When reviewing market data, examine the information reported for all the compensation elements to get a more holistic view of competitive practice. For example, your organization may be offering more in terms of base pay, but less in terms of annual incentive opportunities.
You can also gain other useful insights, depending on what information is being reported. For example, you might observe that organizations have only been paying out modest bonuses, below the target award level. Or you might observe shifts in terms of which jobs are eligible for annual incentives.
Insights gained from market data can help you take stock of your compensation programs and how employees are paid. The key is to find good data that makes sense for your organization.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.