Why HR Must Know Market Data

Why HR People Should Know Market Data

A lot of people assume that human resources professionals are all about the “fluffy stuff,” like employee morale, following up with benefits issues, making sure an employee gets leave for family emergency and other very human dilemmas. They aren’t usually relied upon for hard-hitting market data. But, they should be. HR pros should be the best resource for data about a company’s labor costs.

Q3 2011 Compensation Trends
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If you’re not comfortable being a data expert or crunching numbers, the following list of reasons why and how human resources professionals should use data may help you. Being both people savvy and data savvy can boost your career and you department’s reputation in the company.

Why HR People Should Use Data

1. Increases credibility. Including data in your reports and presentations establishes your credibility and shows that you know your stuff. Plus, numbers are often the language of your executive team so your speaking to them in a way that they understand.

2. Turns opinions into facts. Using data backs up your case better, often times, than more words. It  can give weight to your opinions and make them less yours and more a simple matter of fact. You don’t have to defend them in the same way because they, hopefully, defend themselves.

3. It's easily quotable. You may talk with your audience for a full five minutes and they may only remember two things that you said. Ideally, if you made your key points with data those who heard them will easily recall your reasoning and be able to explain it more accurately and easily to others in the company.

How to Use Data Effectively

As you ramp up your knowledge of your market and include more data in your communications, there are ways to make your efforts more successful.

1. Avoid doom and gloom. Don’t present worst-case scenarios only and ignore important variables. For example, as shown in the results from The PayScale Index for the Q3 2011, wages for all workers in the construction industry as a whole are trending up. This trend includes wages for accountants, receptionists, and people making deals and signing contracts, not just construction labor. In contrast, wages for construction jobs alone continue to stay flat or fall. It looks like there is a mixture of good news and bads news in construction.

Anecdotally, many of PayScale’s clients have commented that the commercial construction isn’t suffering as much as residential construction. That may be why the industry overall is seeing a small recovery but it isn't big enough, yet, to affect all workers' wages. So, depending on your company’s product, you may need to bump up wages, or not. You have to consider all of the data available to you. If you are in commercial constrution, it might be an okay time to hire.

Quarterly Compensation Trends for Construction Industry
The PayScale Index uses 2006 average total cash compensation as a baseline.
Construction Industry

 

Quarterly Compensation Trends for Construction Jobs
The PayScale Index uses 2006 average total cash compensation as a baseline.
Construction Jobs


2. Keep it interspersed. You don’t want to have an entire presentation focus only on data. Don’t overload your audience. Be sure to tell a story. Pick out two or three main data points that fit into your overall objective or goal. Which data has the strongest influence on your business? That is the data you want to highlight.

A place where you can easily get into data overload is The PayScale Index. The Index can be cut by company size, location, industry and more. The following is an example from The PayScale Index of how to avoid overwhelming your audience with data that isn’t relevant.

Seattle has seen the strongest year-over-year wage growth for workers recently. It’s clear that Seattle’s strong tech sector and the battles for tech talent going on there are driving up wages. That said, if you are small tech company in Seattle, you could focus on the fact that wages at small companies are not doing very well, nationally, and keep yours low. If you did this, you would risk underpaying your tech talent and getting behind your competition. It would be best, if you had to present to your company, to focus on the data about IT wages, not small company wages.

Quarterly Compensation Trends for Information Technology Jobs
The PayScale Index uses 2006 average total cash compensation as a baseline.
Information Technology Jobs
Quarterly Compensation Trends for Seattle Metro Area
The PayScale Index uses 2006 average total cash compensation as a baseline.
Seattle Metro Area
Quarterly Compensation Trends for Small Companies (0-99 employees)
The PayScale Index uses 2006 average total cash compensation as a baseline.
Small Companies (0-99 employees)
Get a Free Compensation Trends Report for your industry and company size.



3. Use data to make forward decisions. It’s not worthwhile to rehash the past. Just like the stock market, past performances are sometimes great indicators of future performance, and sometimes they are not. We have to use data carefully so that we do not limit our opportunities. What does that mean?

For example, wages in the wholesale industry trended up recently, after staying mostly flat or down since early 2009. If your company had an initiative they were hoping to launch that involved the wholesale industry, this boost in wages might indicate that now is a good time start that initiative. Sure, the past few years have been bumpy for wholesale trade, but it might be worthwhile to at least start planning to expand or hire, just in case.

 

Quarterly Compensation Trends for Wholesale Trade Industry
The PayScale Index uses 2006 average total cash compensation as a baseline.
Wholesale Trade Industry

 

Regards,

Stacey Carroll

PayScale, Inc.

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