Surveys collecting information about employee compensation, including salary and benefits, are commonly called salary surveys. Salary surveys are conducted with numerous employers to determine pay levels for specific job categories and are generally conducted either by region, sector or job classification for the purposes of comparability. In conjunction with other tools, salary surveys can provide useful information to attract, support and retain employees within the context of an overall HR and organizational plan. When designed and used properly, salary surveys can provide useful benchmarking information for comparing salaries and benefits.
Many organizations want to use salary surveys to set the compensation levels for their organizations. Unfortunately, it’s not always as easy as reading a survey and using the information. Below you’ll find important information about how to assess salary surveys and get the most out of the information they present.
WHAT DO SALARY SURVEYS CONTAIN?
A salary survey is a standard method of finding out what other organizations are paying for specific jobs or job classes. Large organizations in particular routinely conduct compensation surveys to determine prevailing pay rates and benefits. These surveys not only determine the low, high and average salaries for a given position, but also provide a sense of what other organizations are paying. Organizations may purchase results of surveys conducted by a variety of organizations proficient in the collection, analysis and distribution of salary data, or they may choose to conduct their own salary survey.
ASSESSING SALARY SURVEYS
A key to successfully using the data contained in a salary survey is to understand the assumptions and criteria used to collect the information. Finding surveys that clearly report the basis for collection and dissemination of information will help you to ensure that you are referencing a survey that is relevant for your organization.
Below you’ll find information on what makes a salary survey useful for benchmarking. Salary surveys need to be readily comparable and scientifically credible to be useful for benchmarking. The following provides a summary of how to assess a salary survey.
Compare apples to apples
It is important, when reviewing salary surveys, to make sure that you are comparing information that is similar. Looking at salary and benefit levels in organizations vastly different from your own will not provide the information you need. Here’s what to look for:
Review job descriptions or position profiles in the survey report
It is important to look at job duties and responsibilities, not just job title, when deciding if salary survey information is comparable. To be comparable the jobs must have a similar level of responsibility and range of duties.
Note province and region
Appropriate salary comparisons will come from agencies with a similar geographic focus: local, regional, provincial or national. At the local level, the best salary comparisons will come from other organizations in the same city or town. Good salary comparison may come from a different city or town with similar labour market characteristics and a similar cost of living.
Note operating budgets of respondent organizations
As a general rule, larger operating budgets mean higher salaries. Comparable salaries come from organizations of a comparable size. Size is usually estimated by using the operating budget or looking at the number of paid full-time staff.
Note the types and descriptions of respondent organizations
Are the functions, services offered, clientele, and sources of funding of the organizations in the salary survey comparable to your organization? For example, a child care organization that receives much or most of its funding from government sources may have very different salaries than one that does not.
Note the education level and (full/part-time/union/contract) status of respondents
The level of education required for a job and the type of employment arrangement can have an impact on salaries.
Note the year of data collection and the date of the report
Labour market forces can result in significant changes in salaries in a short period of time. More recent data will be more useful in establishing current salaries.
Note if the survey is a one-time event or if it’s repeated
Surveys that have been repeated provide an added advantage of showing trends in salaries over the years of the survey.
Evaluate its validity
It’s important to ensure that the salary survey was conducted in an objective, valid and reliable manner. What are the sampling frame, sample size and response rate? What is the margin of error? Is it reported?
For information to be valid it has to come from a large enough sample size. For example, if you collected just three salaries for the same position and one salary is high, one is low, and one is in the middle, you wouldn’t be able to conclude much because your sample is too small to provide valid and useful information.
You also want to be sure that the information is reliable. Reliability means that the survey gives consistent results. You should therefore carefully consider how the information is gathered and decide if it makes sense to you. For example, if the survey instrument is included in the report, assess if it would be easy for you to give accurate answers to the questions.
Rate its usability
A good salary survey will define terms and provide the user with enough information to help her or him easily understand the data. Technical terms should be explained or defined and the report should be comprehensible to non-specialists.
Look at all the numbers
The actual salary paid to an individual will be influenced in part by the person’s years of experience and qualifications. Therefore, the salary range for a position provides more useful information than the actual salary an individual is being paid. Other statistical information such as the median salary – the value in the middle when all the values are arranged from lowest to highest – will also help make sense of the data.
Consider the total compensation package
Having information on the total compensation package – retirement plan (pension or RRSP), bonuses, benefits and salary – allows for better comparisons. Without this information you might make wrong assumptions about salary levels and not have the full picture. For example, in a situation where no benefits are provided, many people (particularly those in higher positions) will negotiate higher salaries. Without seeing the whole compensation package, you might not understand that the high salary compensates for no benefits.