Base Salary– the Data and Factors Behind the Number

I recently attended a presentation about the rise in popularity of crowd-sourced compensation data. Crowd-sourced compensation data is employee-reported data that is typically accessed via the internet (Spake, 2018). This data can be found through online platforms like Glassdoor, Salary.com, PayScale, and LinkedIn.

Individuals in many different fields are entering their salary information on these websites for your job candidates and employees to review. Are you or your managers prepared to answer- why are you not paying me [insert salary amount]? Are you prepared for candidates to not only have personal expectations of salary but data from the internet on competitive pay?

Know what differentiates salaries

As an employer, many factors go into employee compensation; differences occur between companies as well as between employees. The offer you provide to one candidate or employee can be different than another, as long as it is not for a discriminatory reason. Reasons for differences in salaries can include years of experience, education, specialty skills, responsibilities (including managerial responsibilities), working conditions (including location). Differences in pay between companies include the ability to pay (budget), cost of living, business strategy, and the labor market. If an employee asks why am I paid less than John Smith or why am I compensated less than someone at Google? Be prepared to explain the differentiators.

Review Market Data

When an employee or candidate comes to you with a salary figure you may want to review what is the current market data for the role, are you staying competitive in what you are offering?  There are resources both free and paid. O*NET OnLine is an excellent free resource for market data, as it is sponsored by the U.S. Department of Labor. PayScale and Salary.com can be used by employers as well. Keep in mind that data from free resources like PayScale and Salary.com are unverified unlike the paid surveys from Aon, Mercer, and Culpepper. When reviewing market data, be cognizant of the size of your company, a smaller company’s pay equivalent tends to be in the low or medium range on a data scale.

See also: Reductions to an Exempt Employee’s Salary

Discuss Total Compensation

Compensation is not only the amount on a paycheck. Total compensation is salary, benefits, perks, bonus programs, job responsibility and growth opportunities. Total compensation is not represented in the data found on the internet. You have probably heard someone say “you could not pay me enough to work at XYZ company.” Those comments show that pay is significant; however, it is not the only way to reward and keep employees. When having salary conversations be sure to highlight the total compensation an individual receives.

 

If you have any questions about salary reviews, salary determinations, handling inquiries from employees and training your managers on compensation, I encourage you to please reach out to your Client Services specialist today.

 

Spake, J. (2018). Crowdsourced Compensation Data: Do We Trust It?.

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