Four reasons why salary surveys are a must in 2021

/DesktopModules/DigArticle/MediaHandler.ashx?portalid=0&moduleid=572&mediaid=693&width=885&height=200
     
August 11, 2021

Accurate and timely compensation data hold even greater value this year as a new post-pandemic normalcy begins to take shape. Presently, the general economy appears to have stabilized and is starting to rebound. A closer look at the details reveals significant differences across industries, locations, and company sizes. The 2021 compensation trends we see in the data reinforce how simply aging salary survey data would be a mistake.

In recent years, it seemed that most companies were on equal footing when it came to employee compensation information and forecasting. Competitors had similar data and made business and labor decisions in roughly similar patterns, leading to steady 2.6% to 3.0% annual pay increases. We’re halfway through 2021 and it seems like the economic factors for managing pay are pointing in varying directions.

The world has changed, so has compensation

How work got done in 2020 was dramatically different for many jobs. According to Mercer's US/Canada Flexible Working Policies & Practices Survey, only 28% of US and 15% of Canadian organizations offered some form of full-time remote work arrangement before the pandemic. As of spring 2021, 62% of US and 77% of Canadian companies have implemented full-time remote working in response to the Covid-19 pandemic.

The pandemic may have been the catalyst that instigated greater remote and flexible work arrangements, but most changes are here to stay. Significant changes in job skills and performance have led to changes in compensation strategy as well. Some jobs have changed so dramatically at a skills level that they may not even resemble the same position as in prior years. Many jobs will now need to be evaluated and remapped to survey data and the compensation plan re-evaluated. An approximation can miss the boat entirely, especially this year.

Should you redesign your compensation strategy or tweak your existing one? What are your competitors doing?

The devil is in the details

While some industries fared well during the pandemic, others are still trying to recover and continue to feel the impact of the pandemic and related pressures. Some companies had to cut jobs and freeze salaries, while others responded to increased client demand by expanding staff and prioritizing key talent retention. Only the details found in this year's data show the actual impact on particular jobs, industries, and locations. The effect was not the same across the board. For example, the 2020 Mercer Benchmark Database median base salary increases year over year were relatively homogenous across industries, with most showing 3.0%. Of the 14 industry super sectors, only Other Non-Manufacturing showed an increase above that number, at 3.5%. The Services (Non-Financial), Energy, Retail & Wholesale, and Life Sciences deviated as well, but on the lower side, ranging from 2.5% to 2.9%.

However, in this year's data, we see much more variety. The highest median year-over-year base salary increase of 3.3% in Life Sciences to the low of 0.0% in Services (Non-Financial) shows that there isn't a clustering around a particular percentage this year. As you can see in Chart 1 below, looking at the average year-over-year base salary increase by industry shows even more variation.

And it doesn't stop there. Even within industries, some jobs are experiencing rewards at a much higher rate than others.

The complex labor market we see in 2021 means that there is no shortcut or substitution for valid, quality salary survey data and compensation reports.

navigating the journey to pay transparency image

If you’re not paying competitively, nothing else matters

Through a combination of headline events and years of slow incremental change, social issues found their way into the spotlight. Creating a safe and inclusive work environment, flexibility for working caregivers, pay equity, and reskilling employees are essential components of the employee experience and your employer brand.

However, a strong foundation of competitive pay remains essential. Increased pay transparency and access to pay data through the internet empower employees to become more critical of current salary or new employment offers. Flexibility, company culture, and having a good manager are still necessary for recruiting and engaging employees, but to be considered, pay must be competitive.

Some industries experiencing talent shortages find that their employees are contemplating where and how their time is most valuable. The closer you are to that sweet spot where the company, employee, and external perspectives align, the better off you are. Being confident in your understanding of how the market is moving makes your compensation and overall talent strategy more effective.

Your compensation strategy is likely shifting

Talent is no longer flocking to major urban areas for job opportunities.

Employees are moving to less expensive areas with a lower tax burden — how should that affect total compensation? What does that do to the market data you are using?

Many employers are considering whether jobs that were previously assigned to a particular location, and paid accordingly, should now be paid using a national pay range. To make a shift like that, what do you need? Up-to-date, quality market data like that found in a variety of salary surveys that Mercer provides.

Bonus! Our data is better than ever!

Mercer made a significant change over the past several years, which has streamlined the survey participation process and a platform for leveraging data across surveys. What does that mean to you? A much richer database of quality compensation data points for you to use in your market pricing and compensation assessments!

For example, our renowned general industry survey, the 2021 Mercer Benchmark Database (MBD), now includes data for 4,884,281 respondents, up from 3,375,026 in 2020 — that's an increase of 44%! Because organizations are providing data for their entire workforce, rather than the limited number of matches for particular survey modules, we've been able to collect and publish salary data on an average of 20% more job titles.

In particular, the Engineering & Design module of MBD shows a 69% increase in published jobs — in 2020, we published 481 jobs, and this year, we're nearly doubling that by publishing 811 jobs.

Think about how that increase means more data on engineering specialties and levels, which means you can specifically market price your engineering and design roles.

But, it's not just about the jobs — in MBD, this increase in incumbents means we're able to have richer databases in more locations across the US. The survey includes just under 350 locations. In over 60 locations, we increased the number of jobs that we can publish by 100%. One of those locations happens to be San Jose-Sunnyvale-Santa Clara, California, otherwise known as Silicone Valley — in 2021 we are reporting 252 jobs, up from 98 the prior year and an increase of 157%. The increases in reportable jobs are not just limited to metropolitan areas in the East and West coasts, they span the nation.

Not convinced yet? Give us a call at 866-605-1031. Or if you prefer, send an email — we like that too!