Considerations when managing your salary survey purchasing budget, plus 5 questions to ask survey vendors

Data is at the core of any effective compensation strategy — salary data that you find in salary surveys. A salary survey is used to ensure that you are delivering competitive pay by comparing your company to the external market for similar jobs. Salary surveys are an important component of any compensation strategy as they inform important decisions for finding and keeping talent. Knowing the market value of jobs in your organization enables you to make competitive offers when hiring and reduces the risk of over- or underpaying for roles, which can lead to turnover or poor results. 

Because employee salaries constitute one of the largest expenses for most companies, misinformed decisions can have an impact on financial performance. But, with so many different surveys and vendors out there, how do you know which survey and vendor will provide the insight you need to deliver the results you want? 

You probably know that best practice in market pricing jobs is to have multiple data sources. The idea is that you will be able to smooth out the highs and lows of different salary surveys as well as have enough data to choose from should there be anomalies or jobs not reported in a particular year. The goal would be to have three data sources, typically from different survey vendors. Three sources are often not possible, though, due to budget constraints. 

So, what should you focus on when selecting salary surveys for your organization to ensure you’re getting the most out of your budget?  Consider the three C’s: Coverage, Cost per job, and Coordination.

Coverage

How much of your population is covered by the data the survey provides? In terms of geographies, specialized jobs, and levels and branches of your job architecture, is a significant proportion of your population covered? Are there large gaps that require additional surveys to ensure proper coverage?

A key aspect of coverage is understanding how representative the survey data is of the entire market. It is crucial to ensure that the survey captures a significant proportion of your population, allowing for accurate benchmarking and informed decision-making. Inadequate coverage can lead to incomplete data, which may result in suboptimal salary and pay decisions.

Comprehensive coverage should encompass specialized jobs within your industry. Different jobs often have distinct salary ranges and compensation structures. By utilizing a survey that covers a wide range of specialized jobs, organizations can make accurate salary comparisons and adjustments based on specific roles.

Coverage should extend to different levels and branches within your organization’s structure. This ensures that the survey data is applicable to entry-level employees, executive employees, and those in between. It allows for accurate analysis and decision-making at different levels within the organization.

Cost per job:

Take the total cost of the salary survey and divide it by the number of jobs you can reliably price using that survey. The resulting ratio allows you to compare the cost-effectiveness of one survey to that of another and helps you make year-over-year decisions on how to manage your survey library.

Determining the cost effectiveness allows you to assess whether the survey provides a reasonable return on investment given the data provided, helping you use your budget effectively. It is a great tool when comparing different surveys and deciding which might be the best option for your needs and budget.

Coordination

How easily can you incorporate this survey’s data into your market pricing tool, whether that’s an Excel spreadsheet or a particular software? Is it an arduous process or an easy automated upload? And, what support can the survey vendor provide?

Having the survey data is great, but being able to utilize the data is obviously a necessity. Understanding how to upload the survey data quickly and easily into your market pricing tool not only saves you time and resources, but also enables you to quickly access that data when needed. If you had to go through 15 different steps every time you needed to access a data point, then it’s worth considering the effectiveness of that survey to your organization.

You should also be familiar with the scope of the survey vendors support team. Can they help you with data integration? Are they readily available to address technical challenges when they arise? And, arguably most importantly, do they offer ongoing support? Compensation planning is an ongoing process, so it’s essential to have an ongoing relationship with your salary survey vendor.

5 Questions to ask salary survey vendors

As you’re shopping for salary surveys, you’re likely to find some similarities from one vendor to another but also some differences.  Use these five questions below to ensure you understand just exactly what is included in each salary survey and that you’re comparing ”apples to apples.”

1. What jobs are included in the survey?

A salary survey will only be useful if the jobs included in it are aligned to those at your company. Request a position list, including position descriptions, for any salary survey you are considering.  

2. Who participates in the survey?

Though participation varies from year to year, knowing what companies tend to participate in the survey and therefore make up the data set is critical when selecting a salary survey, because this is how you will represent the labor market you compete against. Look at the list of participants in any salary survey you are considering before making a purchase.

3. How is the data collected?

Understanding the methodology behind a salary survey data collection and being able to clean and collate the data promote confidence in the data and validate the trustworthiness of the source. Employer-reported surveys contain data provided by actual companies, identified by HR or compensation professionals, directly from their HR information system. Once they are provided to the survey vendor, the data should go through a rigorous cleaning and validation process to ensure accuracy. At Mercer, with the help of automation (and some keenly observant survey specialists), submissions are analyzed in a variety of ways, keeping an eye out for any abnormalities or discrepancies that might compromise the accuracy of the survey. Once all data is collected, outliers and discrepancies are identified and then validated by the participant to determine whether the outlying data is relevant or whether it should be omitted from the results. Survey vendors who subscribe to this level of rigor produce the highest quality product. A reputable salary survey provider will also be forthright about their desire to adhere to relevant anticollusion regulations. Compliance with these guidelines ensures that participants’ data is protected and prevents anti-competitive misuse of information. 

4. What data scope/cuts are available?

A robust survey will contain enough data for you to view pay based on refined criteria, such as role, geography, pay elements, or industry. By refining the data, you’ll be able to create a more comparable labor market for more precise results. Using a data set that is too broad could result in the inability to accurately reflect the impact of a role or the competitor set for your company, which can lead to over- or under-paying for jobs. 

5. How do I participate in your surveys?

Participating in salary surveys is a commitment. You will want a vendor who allows sufficient time to complete the task and who makes the process as easy as possible. Access to previous data submissions will greatly streamline your effort and participation documentation, webinars, and access to a client support team are all reasonable expectations on your part. You may even inquire about participation services and the vendor’s capacity to complete the task on your behalf. 

Want to learn more about how salary surveys could benefit your company? Contact us today for a FREE survey review at surveys@mercer.com or 855-286-5302