Key Takeaways:
- Salary surveys allow you to determine the competitiveness of your employee compensation package.
- This benchmarking tool helps you make informed decisions about changes to the salaries, benefits, and promotion increases.
- For better data collection, the salary market analysis should be conducted with same-industry employers whose business size is similar to your company’s.
- If you don’t have the expertise or time to run compensation surveys, partner with survey companies who can manage the entire process.
- For simple salary comparisons, use online salary comparison tools.
What Is a Salary Survey
A salary survey is a benchmarking tool to help you collect and analyze employee compensation data, such as wages and benefits. These surveys are conducted with different employers to determine pay levels for specific jobs in the organization. For better data comparison, the surveys are usually carried out by region, industry, and job classification, such as entry-level or manager-level positions.
Why You Need a Salary Survey
When designed properly, compensation salary surveys can be powerful tools. Access to survey data can aid with compliance—you can use it to check whether your pay rates and benefits plans follow federal, state, and local wage, pay equity, and labor laws. This is also important for companies with federal contracts (like those in the construction industry), which often need to show that they pay prevailing wage rates to employees. Payroll reports can prove that, as well as salary survey results that compare your compensation package with market rates.
Knowing salary market trends and what other companies offer can also help you create an employee compensation package to attract and retain top talent. Let’s say you decide to or are already providing a benefit or perk that only a handful of employers offer, that benefit can serve as your competitive advantage, which you can use to build a positive employer brand.
However, even if you use a good survey and reliable survey provider, there are some advantages and disadvantages to it.
Pros of a Salary Survey
There are many advantages to using a salary survey. Those advantages include:
A compensation survey lets you gauge whether or not your salary package is above, at par, or below market rates. It’s also a good benchmarking activity—you can compare what you offer with the pay structures of competitors and similar companies in the industry your business belongs to.
A salary survey can help you make decisions that are backed by research. For example, you want to calculate employee costs for the next year. You can check the average wage increases or merit increase percentages that are typically available in salary survey reports to determine how much you need to add to next year’s labor cost budget.
You can even use it as the basis for planned benefit improvements. Let’s say that the survey data shows that providing a “new child bonus” to eligible employees has become the norm in your industry, and you want to offer the same benefit to remain competitive. You can compute how much that will impact your compensation budget and assess whether you have the resources to offer it.
If you regularly conduct salary market analysis to determine whether your compensation structure is competitive, this can indirectly boost engagement. Why? One of the key drivers of employee engagement is the salary and benefits that workers receive. If they are happy with their pay, it contributes to their overall job satisfaction and is a great way to improve staff morale.
Cons of a Salary Survey
While a salary survey can help you make informed decisions on what to improve to make your compensation package competitive or at par with market rates, it does have some drawbacks.
Designing, implementing, and managing wage surveys can be complicated and challenging. I don’t recommend it for small businesses because it entails having a network of same-industry employers you can invite to participate in your survey. You also need a dedicated person or HR expert to track data collection, analyze the results, and answer “what is compensation survey” questions that participants may ask.
Regardless of whether you join a survey activity or partner with a provider who can handle the entire process, it usually takes several weeks or months before you can get the results. The number of survey questions, employees, and job categories or roles can also affect data collection, participants might need a week or two to complete the information requested.
Given economic fluctuations and ever-changing labor regulations, the survey data might likely be inaccurate by the time you get it. Note that many survey providers require current salary data for their annual surveys but release the results the following year, which means that the information provided may be outdated before you can start using it.
The quality of data you get also depends on how forthcoming the survey participants are with their organization’s pay and benefits details. Some are wary of sharing confidential salary information. Partnering with reputable survey providers, such as Willis Towers Watson and Mercer, can help as they typically withhold the identity of participants and present anonymized results. However, this option can be expensive—costs can range from hundreds to thousands of dollars a year.
It can be difficult to look for a reputable partner to help you run an international salary survey or collect data from areas outside of the US. Most survey providers only offer access to local information. Some may have global resources but this can be very expensive or their survey coverage might be limited to a handful of countries.
Types of Data Collected
A salary survey collects both quantifiable and non-quantifiable data. Sample compensation survey data points include:
Quantifiable Data | Non-quantifiable Data |
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Where to Find Salary Surveys
There are various resources for salary surveys and compensation data. Some are free while others are paid options. Here are the main source types:
Survey Companies* | Membership Associations* | Free Salary Data Tools | Benchmark Reports via HR Software*** |
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*Offers paid surveys or requires a paid membership to access exclusive HR content/studies **Has paid and free pay data reports ***Requires a paid software subscription | |||
Salary Surveys Frequently Asked Questions (FAQs)
Salary surveys can help you identify wage trends and understand what different companies pay for similar jobs in your organization. Best of all, it allows you to determine whether your employee compensation package is competitive if compared with market rates and companies that belong in the same industry.
This depends on many factors, such as whether it was conducted by a reputable provider and when the survey data was collected. The type of data collected can also impact survey accuracy as it may not contain the information you’re looking for, such as wellness perks and bonuses.
In choosing a salary survey, determine how extensive you want it to be and consider your budget. If you require market compensation data that includes salaries, bonuses, and benefits, partnering with a reputable vendor that offers paid surveys is best. However, if you only need general pay information for specific roles, look at job boards or free survey data sources, such as Indeed and the BLS, to collect salary details.
While you can try to create one, implementing salary surveys isn’t easy and you might not have the time or expertise for it. Even if you have a dedicated person to handle the entire process and address “what is a compensation survey” questions from survey participants, you need to have a wide network of business owners in the same industry who are willing to participate in the activity. For hassle-free surveys, I recommend using the tools mentioned in this guide or partnering with one of the survey companies if you have the budget for it.
