MARKET PRICING 101: USING GENERAL INDUSTRY AND INDUSTRY SPECIFIC DATA
With the number of salary surveys available today, plus all the various scope cuts available within the surveys, it can be overwhelming to know what to use. As discussed in another article within this Market Pricing 101 series, Establishing a Benchmark Methodology Unique to Your Organization, the importance of selecting surveys and documenting the data cuts and blending method used in order to ensure consistency, accuracy, and efficiency cannot be understated. But, just understanding when and how to use general versus industry specific data is something that deserves additional discussion.
Survey or Survey Scope Cut
You can collect and utilize data that is specific to a particular industry in two ways: either by using an industry specific survey OR by using a general industry survey but refining the data by an industry scope cut. Let’s look at the difference between the two.
In a general industry survey, such as US MBD: Mercer Benchmark Database you have the option to refine your data set by selecting from a set of Industries (e.g., High Tech, Consumer Goods, Life Sciences). When you do that, you are taking the full data set which includes over 3,000 organizations, in the case of MBD, and reducing that data down to just those organizations that fit into those industry categories. This data sub-set, in many surveys, can then be narrowed further to only reflect the company size and/or location that are relevant to your organization or the particular jobs that you are market pricing.
When using refined data cuts from general industry surveys you need to consider how you use them, being cautious not to combine data cuts from the same survey that would, in effect, be double-counting the same data. For example – if you choose to use the “All Data” cut and the “Industry: Finance” cut for market pricing the same jobs that would mean that you are including the responses from any company that is in the Finance industry cut twice, since they are also included when you do not refine the data and use the “All Data” cut. Typically, when using more than one data scope cut from the same survey you are using them with different jobs or employee segments.
In an industry specific survey, such as US MCTS | Mercer Total Compensation Survey for the Energy Sector the data set already includes only those that identify within the particular industry. Often times the overall participant set is smaller than in general industry surveys, but the benefits are numerous:
- Possibly a larger number of overall participants in just that industry than you would find in the general industry report, meaning more statistically significant data
- More jobs or variations of jobs that are relevant to that particular industry making for more specific job matching
- Sometimes industry specific surveys will include policy and practice information that will capture practices that differ from the broader industry. For example, only in healthcare surveys are you going to find information on all the various types of pay that apply to nurses.
When using industry specific surveys, you are typically applying that data only to specific employee segments or jobs within your organization – those that require industry experience. If you choose to blend industry survey data with a cut from a general industry survey, you’d typically also be utilizing the data refined by industry scope with the goal of diversifying your data sources.1
Confused yet? You’re not alone. Using salary survey data and all the various scope cuts and data elements effectively can be challenging. And consistency is key. Do yourself a favor and develop a benchmark methodology – the act of developing it will help you think through all of your choices and documenting it will ensue consistency going forward. Best of luck to you!
Need help developing your benchmark methodology? Check out the article Establishing a Benchmark Methodology Unique to Your Organization within this Market Pricing 101 series for some helpful tips and tricks.
1 Best practice is to attempt to collect at least three data points for each job when market pricing.