Scrambling for compensation data every time you hire a new employee won’t help your business scale. The sooner your HR team is allowed to invest in a reliable compensation survey, the sooner it can create the people programs and strategies truly needed to drive growth.
1. It pays for itself. Purchasing a large, well-established salary survey may seem like a big expense in a vacuum, but you’re likely to see a return on investment within your first few hires. Plus, your team will be able to cut down on research time, have more energy to work on establishing consistent compensation programs, and won’t have to scramble for data every time your business enters new talent markets or adds new types of employees. Between efficiency gains in HR and talent acquisition, and improvements in employee engagement related to fairer and more consistent compensation decisions, great survey data quickly pays for itself.
2. Create a culture of consistency and transparency. Let’s say your company is about to hire a new software engineer, but they are asking for a lot more money than engineers currently on your team at the same level. You could pay your new hire exactly what they want and try to keep things quiet, but hoping for secrecy doesn’t really work well in today’s millennial-dominated workforce. The right course of action is to have a well-defined salary structure in place to guide how job offers are made. However, getting there requires great market data. A good compensation survey serves as the source of truth your HR representatives and people managers need to make and communicate pay decisions with transparency while also staying consistent and up to date.
3. Pay people the right way; know the latest practices and trends. It’s very easy to get caught up in how much people make, but it’s just as important to think about how people are paid. For example, when it comes it equity awards, you need to think about equity vehicles, vesting schedules and eligibility just as much as grant sizes. The same is true for bonus plans, where you need to consider things like bonus pool funding, metrics and the appropriate balance between measuring individual vs. company performance. A good compensation survey will include access to this type of information so you can both set pay levels and build pay programs.
4. Make informed decisions and spend your money wisely. Your company’s CEO won’t approve of spending a significant amount of money on a new HRIS system without asking for some real research beforehand. So why would you invest a significant amount in a prospective employee just because “it sounds about right”? Compensation surveys allow you to make truly informed business decisions by giving you reliable benchmarks based on your industry, company size, and closest competitors for talent. They allow you to understand and manage the market for talent rather than being dictated to by the market.
5. Save time by getting all of your data in one place. While there’s a growing volume of free compensation data out there on the internet, hopping from website to website to cobble together pay packages isn’t a recipe for long-term success. It’s a time-consuming process and the use of inconsistent and fragmented data sources can create real risks for your business, including weak internal pay equity and a propensity to burn through cash and equity resources faster than expected. Using a strong, industry-focused compensation survey as the foundation for your pay decisions will allow you to make fairer decisions and manage resources more wisely. You’ll also save lots of time by having all of the data you need, including base salary, annual bonus and equity award information, on one consistent platform.
As you allocate resources and gear up for Q1 compensation planning, make sure there is room in your budget to establish a survey spend for Q1 and beyond. Well thought-out reward policies are always backed by reliable data and the ability to generate a series of informed decisions around it. Investing in the best market data provides real returns that are indispensable for the future success of your firm.
To learn more about using market compensation data to benchmark your reward strategies, please contact us now.