In the last post I talked about convenient, easy-to-use, and sometimes free resources, Payscale and Salary.com. In today's most recent installment of The Compensation Chronicles, we will look at compensation reports from industry experts at top-ranking consulting firms. Survey results differ from PayScale and Salary in that they are conducted privately by firms like Mercer and Willis Towers Watson that specialize in compensation. These reports are available for purchase at a pretty high cost since they are usually bought by companies, not individuals, who can foot the bill. Typically, these firms will offer a discount for companies who elect to participate in the survey in order to incentivize greater participation and thus have more accurate data (yay, larger sample size!). Both the online resources mentioned last week and compensation surveys provide data for salary ranges at the 25th, 50th, 75th and 90th percentile.
Unfortunately, in surveys, there isn’t the flexibility of changing years of experience or level of educational attainment before running the report and Analysts are limited to the jobs included in the survey results. However, a plus is that consulting surveys often offer an interesting breakdown for the country as a whole and then by geographic region (see map below) and sometimes even by state. Sometimes the firm is unable to gather enough data to accurately describe the salary ranges for positions in certain markets, but, it is good that they elect to leave those areas of the report empty instead of adding false or unreliable data. On the other hand, if there is an extraordinary amount of data coming from Texas, for example, on Registered Nurse Case Managers, then the report will include an additional line below the region and sub-region for the state.
Now that you understand the resources we use for the determining a recommended compensation range for positions, you must be asking yourself, “How does it all come together?” Well, the first thing to consider as a compensation analyst is what our company’s target is. Our goal is simple, we want to make competitive offers for our employees in order to attract and retain top talent. The range of data provided by survey reports and the online resources is helpful, but we typically only look at the numbers provided for the 50th and 75th percentile. I like to list them out in a spreadsheet by percentile so that I can compare the data from PayScale, Salary, and the surveys, and then do some data manipulation of my own to find the average of two or three data points, depending on which ones I am using. This gives me an appropriate range for the position's market value or external equity and tells us what our competitors in the industry are likely offering candidates applying for this position.
Yes, there is an element of strategy in compensation, especially when it comes to talent for high-ranking positions, but it spills-over into positions in the middle and lower tiers of the organizational structure as well. While we would like to outbid our competitors on all of the best nurses or nursing assistants, it is unreasonable to achieve this because these positions make up the bulk of our workforce.
Yes, there is an element of strategy in compensation, especially when it comes to talent for high-ranking positions, but it spills-over into positions in the middle and lower tiers of the organizational structure as well. While we would like to outbid our competitors on all of the best nurses or nursing assistants, it is unreasonable to achieve this because these positions make up the bulk of our workforce.
The next thing to consider when “comping an offer” is the candidate’s internal equity at the organizational and locational level.
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