Establishing Market Competitiveness
What data will you use to make evidence-based decisions to establish market-competitive compensation?
Market data is a critical component to designing competitive and effective compensation strategies and budgets. How do you know which is the right salary data for you?
Purchasing standard third-party surveys will provide you with the certainty of rigorous processes and broad data. The majority of survey firms represent a known data source with known cycles for collecting and publishing their results. But these salary surveys take a long time to administer and by their nature they are designed to focus on the prevailing organizations and roles. They may not represent the most current information or provide data for positions critical for your organization.
Conducting and/or participating in custom surveys can be a practical solution for getting the market data you need to drive effective decision-making. In particular, The Talent Company recommends conducting or participating in a custom survey when:
- Standard surveys do not provide market data for unique or critical roles within your organization;
- You want to focus on a very specific peer group;
- You need greater details around total rewards;
- You are looking to benchmark broader HR policies or practices such as paid time off or parental leave top-ups; and/or,
- Aging older data does not reflect the current realities of your market.
Finally, it is common for HR and business leaders as well as individual employees to consult online resources for pay data. Aggregators such as Payscale, Salary.com, and Glassdoor are readily accessible and provide real-time data. In our opinion, even with the improved rigour applied in validating their data these data sources are typically over-reliant on self-reported data and reflect only a small segment of the overall market. As such, we recommend using them as a validating not a primary source of data.
Once your relative market position has been established, you can use that data to calculate the budget needed for your organization to match or lead the market.
Like this article? This question, “What data will you use to make evidence-based decisions to establish market-competitive compensation?” is just one of 10 critical questions you need to ask to help you with your 2023 compensation budget. To learn more about the other critical questions and how to address them, you can download our complete and complimentary white-paper here:
