Advantages and Considerations

These organizations provide a variety of compensation data services to help businesses plan, model, and execute competitive pay policies. Comprehensive datasets are compiled using employee or employer-reported market data and updated on a continuous basis. Many of these providers offer similar types of services which include small-scale reports generated on a job-by-job basis and larger scale market studies that are generated and down-loaded via the web for a fee. Some offer full scale software programs that can be set up on a client-by client basis, making a library of current salary data available at your computer screen.

There are thousands of published surveys to choose from – select one or more that will provide data for most of the jobs within your organization. Many vendors give survey participants sizeable discounts on the report purchase price. Look at the participation list to see if the survey contains data from your “recruiting market.” Check the effective date of the data to determine if it is current and timely. Review the job definitions to be sure they are clear and substantial enough to serve as a basis for a job to job match with positions in your organization.

If you have jobs that are unique and difficult to find in published surveys, sponsorship of a survey run by a professional association or consulting firm may be a good alternative. The survey is conducted with your needs and specifications in mind. This option also allows you to be more specific about who you survey and how many organizations you chose to survey. The customization that this option provides increases the time investment needed to successfully run a survey. Advanced planning is crucial and the cost can be substantial.

Conducting your own survey allows you to gather data that meets your specific needs. The survey itself can be formal and comprehensive or quick and informal. Turn-around time can be very brief depending upon the level of detail you decide to include in your study. There are many legal considerations to think about when choosing to go this route. Direct exchange of data by competitors can have the appearance of “price-fixing”. Improper collection and reporting of data can result in legal ramifications if confidentiality is not properly maintained.

Internet sources such as consulting websites and the Bureau of Labor Statistics are all easily accessible. Print ads can also providde clues about the going rates for certain jobs in the marketplace.

When researching data on the Internet it is important to verify the effective date of the information and ensure that the job descriptions listed are adequate enough to use as a basis for a job to job comparison. In general, job descriptions included in print advertisements are very brief and not significant enough to use as a basis for job comparison purposes.

Putting a price tag on a staff job can be a lot harder than pricing products and services. When setting salaries at your small business, there are several things you need to take into consideration.

“First you need to identify how many employees you need,” said Athar Siddiqee, Strategic Client Relationship Executive for salary.com. “You need to figure out what you can afford and how that compares to the market. Also, how do those salaries compare to other salaries in your business. As much as you’d like to believe salaries are confidential, you want to ensure there will be internal equity.”

Siddiqee shared a good analogy. “I always like to imagine that if the salaries of everyone at a business were printed on a spreadsheet and it was left on a table in the middle of the office, how damaging would that be? If you did the right thing, that would be far less embarrassing of a situation. To me it’s a lot about ensuring that not only are your salaries competitive but they are also fair.”

Another thing to keep in mind is that when it comes to salary, it’s a total package, according to Roberta Chinsky Matuson of Yourhrexperts.com. “Really what you want to do is you want to know what your employees value most. You might have a population that really values time off. They might be willing to make less money knowing they’ll get more vacation time. Some may value having their healthcare paid at a higher percentage as opposed to the taxable items like salary. You really need to know what it is your population values. You may be throwing money in the wrong direction.”

Once you figure out all of the details, it’s time to set the salary. The first piece of advice Chinsky Matuson recommends is to stop trying to buy people on sale. “What’s happened in this economy is because people are so desperate to find jobs, they are willing to accept lower salaries,” she said. “But what happens when you get into those situations is that people say they’ll accept it and they eventually get tired of it. Pay what you can afford to and don’t worry about the fact that you could have gotten them for a dollar less an hour. A long-term employee will be worth a lot more than that. Compensation is an art, it’s not a science.”

Small business owners oftentimes cannot afford to pay as high of a salary as a large corporation, but as Siddiqee explains, it’s about more than just compensation.

“I accepted an assignment at a previous employer and moved to India,” he said. “At the end of that stint, I had worked with all of the different aspects of compensation and was getting so much experience. I didn’t get one salary increase during that time. But that was really insignificant to me because it was more about the opportunities that allowed me to grow and develop. That to me was something that my employer could provide that I couldn’t get anywhere else. I was completely engaged. I was learning a lot. It was about feeling that the company was investing in me. If a small business owner can find the key to that engagement and allow their employees to wear many hats, that will often require less of a financial investment and the employees will feel they are gaining a lot.”

Chinsky Matuson added that business owners should be careful who they are getting advice from because oftentimes we tend to listen to what we want to hear and not what we need to hear.

“You can really get caught thinking that you’re doing the right thing, yet in the real world that is so far off. Talk to other people; don’t just talk to your five buddies. You’re competing with large companies, non-profits, and their families. You’re not just competing with other small companies for these people.” —Lynn Celmer

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