There are plenty of salary surveys available and, arguably, there’s not a lot of difference between them. Most provide a number of incumbents, a mean, and multiple percentiles. Some use number of employees to describe company size and some use annual revenue. Most are broken down by industry and geographic location.
Cost is one differentiator, with prices for salary surveys that vary from free (if you participate) to tens of thousands of dollars. Whether your salary data is a good buy or costs an arm and a leg, the value of your salary survey can be enhanced or hindered by how you use it.
Pick A Number
One of the first things you’ll need to do is to decide which piece of market data to use. As mentioned above, most salary surveys provide an average (the mean) for each demographic as well as several percentiles, typically: the 10th, 25th, 50th, 75th, and 90th. The challenge is to determine which one of those numbers is right for your organization.
Having a well thought out pay philosophy in place before you begin conducting a salary market analysis helps smooth the process of using market data to set pay rates. If you don’t have a pay philosophy in place, think about how competitive you want to be in attracting and retaining talent. Best practice is that paying at the 50th percentile is paying at market, which is a good plan if you want to be moderately competitive. If you want to attract and retain the cream of the crop, however, consider paying at a higher percentile.
Everybody Has One
In general, salary surveys focus on jobs that can be found in many organizations—benchmark jobs—for example: accountant, receptionist, sales rep … you get the picture. Benchmark jobs provide the most incumbents in any given survey and the more incumbents, the more valid the data.
The more specific the job, the fewer incumbents, which is one of the reasons why the rule of thumb is if the job as described in the survey is at least a 70% match to your job, it’s a viable indicator of the market rate for your position.