Here are eight reasons why salary surveys are important for a business:
1. Obtain reliable market data from the beginning
A start-up organization is in a unique position to develop fair, consistent, and market-competitive human resources programs from the start. This is a perfect time to shape the business culture and develop the business strategy, as well as the human resources and total rewards strategies and compensation programs. They are all carefully linked. High-quality salary survey data can support your business in making informed decisions to establish its short- and long-term compensation strategy.
2. Cost of labor requires reliable market data
The cost of labor is typically the highest expense in most companies. It is a critical expense that needs to be proactively managed by all businesses. The sooner the expense is managed through credible salary surveys and external market data, the more likely the business will develop the right total rewards programs and practices to support its short- and long-term growth. Your competitors are most likely already using reliable market data!
3. Minimize subjectivity through a quality salary survey
Without external market data, new hire and existing employee compensation decisions will commonly be based on subjective decisions. These decisions form the framework for future compensation practices and programs. Investment in people, capital equipment, and technology should all be supported with quality insight and analytics. Without reliable market data, staffing and pay practices can be based on managers’ prior experiences, recruiters’ observations in the marketplace, or even applicants’ pay history or expectations. In this era of pay equity, a company should avoid asking or making pay decisions based on an applicant’s salary history.
4. Quality market data can influence productivity, turnover, and recruitment expenses
The use of quality salary surveys can help influence fair, equitable, and market-competitive pay decisions that can affect a company’s growth and success. Uncompetitive compensation programs can cost an organization substantial money due to employees’ lack of productivity and engagement, as well as high turnover and recruitment expenses. On the other hand, compensation that is too high is usually challenging to reduce once implemented. Overly competitive compensation programs can also create a lack of turnover. Healthy turnover is the “sweet spot” that allows an organization to evolve, exiting lower performers and bringing in capable, high-performing talent to support in the future success and growth of the organization.
5. Attain a market-competitive program
A market-competitive program can be attained over time with the support of quality external market data. A company that needs to closely manage revenue and costs also needs to actively manage its cost of labor. Strong, industry-focused market data and analytics will support your organization in making informed compensation decisions.
A market-competitive review will provide the required data for your business to identify its current position relative to the marketplace for each employee, job, department, and the entire business. Using this information, a business can establish its annual salary increase budget and future goals in relationship to the marketplace. For example, should a company pay its professional/management employees at the 40th, 50th, 60th, or 75th percentile of the software industry with a $25 million in revenue? An analysis of external market data can help answer this question by allowing businesses to compare their compensation to that of similar competitors.
6. Be cautious of crowdsourced market data
Employees today have easy access to market salary data for their jobs. Online survey data prepared for the masses are referred to as crowdsourcing. This type of data is not always reliable and can be inflated since it is self-reported. Employees raising issues over their compensation have become quite common. In fact, many companies now ask employees to submit an outline of their research and the methodology used before they can make an argument that they are underpaid.
So be cautious and keep in mind that crowdsourced data providers may also receive revenue from the sale of advertising. They typically have a broad customer base, and integrity of data may not be their highest priority.
7. The right compensation mix
Quality salary surveys help establish the right compensation mix for base pay and total compensation for each job, level, and function. A business can then make informed decisions based on market-competitive base salaries and incentives for similar jobs within its industry. The compensation mix is a critical component of providing a competitive compensation package to retain a high-performing, engaged workforce.
8. Paying for market data is a smart investment
Initially, a subscription to a well-regarded salary survey may appear to be a costly expense. It will quickly pay for itself as informed compensation decisions are made based on reliable market-competitive data. Whether the information is used to establish your compensation strategy or make decisions for new hires, existing employees, salary increase budgets, incentives, geographic differentials, pay equity analyses, relocation packages, or communication and transparency, etc., the salary survey data will soon be viewed as a valuable resource to support your business in managing its goals and objectives.
Why Use ERI Economic Research Institute’s Salary Survey Data?
ERI Economic Research Institute was founded over 30 years ago to provide high quality, up-to-date compensation applications for private and public organizations. Our talented team of professionals is among the best in the industry. Most of the Fortune 500 and thousands of small and medium organizations rely on ERI data and analytics for key compensation decisions. We provide high quality, in-depth compensation data for over 14,000 positions in more than 1,000 industries and over 9,000 locations to support our subscribers in making reliable pay decisions. An added benefit is the wealth of resources available to ERI customers.
ERI’s Assessor Series® – Solutions for every compensation decision
Learn more about our products at www.erieri.com or email us at info.eri@erieri.com.
