This is an excerpt from PayScale’s 2017 Compensation Best Practices Report, a comprehensive look at the compensation strategies and pay practices of 7,700 respondents to the Compensation Best Practices survey. Download the full report here.
More and more, organizations are comparing their pay to the market. In fact, more than half of the organizations surveyed (53 percent) have completed a full market study of their compensation in the past year; a quarter did so in the past six months (25 percent). Top-performing companies are more likely to have done a full market study within the past 12 months (62 percent vs. 52 percent of typical companies).
It’s becoming less common for companies to forego market studies. What was once thought of as a tactical exercise is becoming a centerpiece of business. Top-performing companies are less likely to have never done a full market study (17 percent vs. 25 percent of typical companies). So then the question becomes: Which data source or sources should organizations use to obtain their market data?
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Compensation Data Sources
Most companies use more than one data source to cover the compensation needs of their organization; 71 percent report using two to four sources of market data, 11 percent use five or more sources, 13 percent use just one source, and 5 percent of organizations don’t use market data. And, the larger the organization, the more likely it will use two or more sources of market data: 78 percent of small, 84 percent of mid, 88 percent of large and 91 percent of enterprise organizations.
With so many options for data sources out there, from government data to industry surveys, from employee-submitted data to traditional third-party studies, which sources do organizations prefer? It turns out, quality outranks methodology. A majority of companies (57 percent) either love employee-submitted data or don’t care where the data comes from as long as it’s accurate and fresh.
For those who participate in industry and third-party studies, a common practice is to fill out the surveys themselves so that they can receive the report once compiled, either for free or at a lower cost. But the best things in life aren’t free; it turns out that time spent filling out those surveys adds up. A third of companies (34 percent) surveyed spend more than 10 hours filling out compensation surveys annually. A full 40 percent of enterprise companies report spending over one work week (40+ hours) filling out comp surveys.
More Frequent Market Data Requests
Not all jobs, functions or organizations can wait a full year between market studies. Some jobs move fairly dramatically in the market, going from not to hot in the blink of an eye. In 2016, we saw specific skillsets increase the value of a job by as much as 29 percent! As such, savvy organizations have started tracking the data for their critical roles on a more frequent basis.
To date, 47 percent of organizations reference market data for individual jobs more frequently than annually. In fact, 13 percent do so at least weekly. That number rises to 39 percent for enterprise organizations.
Top-performing companies are more likely to reference market data for individual job titles at least monthly (34 percent vs. 29 percent of typical companies).
Want more insight into how other organizations are handling compensation? Download the 2017 CBPR today!
Tell Us What You Think
How often does your organization compare employee pay to market data? We want to hear from you. Talk to us in the comments.