Strengths & Weaknesses of a Salary Survey

Salary or wage surveys typically are useful to HR practitioners looking for benchmarks against which to compare an organization’s compensation structure. Nevertheless, relying on salary surveys, participating in a wage survey or conducting one has its pluses and minuses. Based on the reason for using survey information, employers deserve forewarning of survey weaknesses as well as strengths.

Overview

1. A salary survey generally contains data about wages. Surveys may compare employee wages inter-departmentally, by company or organization, according to job title or position, or earnings for workers in different geographic regions. HR experts use survey data for building compensation structures, or to determine if employees are receiving fair and competitive wages. Start-up organizations may rely heavily on salary surveys to plan for business inception and growth. Likewise, established organizations often rely on salary data for recruitment purposes because offering competitive wages is one of the keys to recruiting the best talent.

Participation

1. Participating in a salary survey means an organization provides its confidential wage data to an entity that compiles and analyzes the data. Salary surveys don’t always reveal participating companies’ names. For example, a published survey might be titled, “Top 10 Retailers Salary Survey” or “Salary Survey of Health Care in Four Midwest U.S. States.”

   One of the strengths of such surveys is that they contain an assortment of data that would not otherwise be accessible or available. Salary survey participants are the first to receive the survey results -- in exchange for their time and information they typically receive a complimentary copy of the survey results. On the other hand, with diligent research and resourcefulness, the names of organizations that participated can be easy to deduce, and upon identifying the employers who participated, those companies’ wage structures are available for anyone to see, including industry competitors.

Use

1. Utilizing salary surveys can make the compensation manager’s job easier. Salary surveys that contain data for specific positions with similarly situated employers -- that is, same size, location or region, and revenues -- can aid in establishing a new compensation plan. Surveys also are useful in periodic reviews of compensation plans. Unfortunately, salary surveys are disabling for some employers, who simply cannot afford to pay the most competitive wages. When well-established, large corporations with the ability to unscrupulously fix wages participate in surveys, they make it near impossible for smaller companies or start-ups to recruit the most qualified candidates.

Currency

1. An obvious weakness that all salary surveys share is currency. Gathering information and conducting detailed analyses takes time, especially if the survey contains a substantial collection of data. In a fluctuating economy, by the time the salary survey is disseminated, the information could be irrelevant or outdated. The Economic Research Institute states in its 2011 white paper, "Evaluating Survey Methodologies," that: "In sum, because salary surveys report data collected for a specific time frame, the results may show large fluctuations in the data reported over the span of multiple years." Delivering a less extensive salary survey in a relatively short time frame can produce more timely information.