The Value of Salary Surveys & Market Analysis in Maintaining a Competitive Total Rewards Package
By Katrina Meigs
The last three years have been tumultuous to say the least. The United States has seen inflation rise 7% in 2021, 6.5% in 2022 and 3.2% so far in 2023 (US Inflation Calculator, 2023). These increases over the last three years are greater than eight prior years combined. As cost of living rises, healthcare costs increase, unemployment rates remain below 4% (Civilian Unemployment Rate, n.d.) and many professions experience workforce shortages competition for engaged, high-performing employees is increasing. As a result, employers are struggling to maintain competitive total rewards packages.
Historically when employers wait until they begin to see attrition within their workforce, relying on information obtained from exit interviews to relay the fact that salaries or benefits are no longer competitive. When this occurs, the gap between current state and competitive total reward strategy can be more of a hurdle to address. Comparatively, regular management of compensation allows changes to occur more often, at digestible intervals and without costs associated with employee turnover. When compensation is too high it can be difficult to reduce or cause a lack of turnover that is not beneficial to the organization. “Healthy turnover is the ‘sweet spot’ that allows an organization to evolve, exiting lower performers and bringing in capable, high-performing talent to support in the future success and growth of the organization (Cox, 2023).”
Costs of labor (salary and benefit costs) are often an organizations largest expense. As such, it’s critical that organizations proactively manage them. Credible salary surveys assist organizations in maintaining a competitive total rewards package that is fair and equitable (Cox, 2023). Through analysis of quality data businesses can make informed decisions in support of their short-term and long-term compensation strategy. Quality salary surveys establish accurate compensation for base pay and total compensation based on the position, level and what tasks are completed. It’s important to be cautious of “crowdsourced” market data that is readily available to employees. This information is self-reported and often inflated.
Finally, its also important to compare apples to apples when gauging how competitive salaries are. To do this market analysis should be established. Region/location, industry and revenue are all factors utilized to understand what organizations are competing for the same employees.
In short, subscribing to a reputable salary survey vendor or outsourcing a compensation analysis project that utilizes this data can strategically advance an organization’s ability to be and maintain a competitive advantage within the labor market. Additionally, having the data to support a compensation philosophy can ensure that total rewards are fair and equitable.
This Newsletter is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.
Civilian unemployment rate. (n.d.). Retrieved December 7, 2023, from here.
Cox, L. (2023, October 31). Why are salary surveys important for a business? ERI Economic Research Institute. Click here to access blog.
US Inflation Calculator. (2023, November 14). Current US inflation rates: 2000-2023. US Inflation Calculator | Easily Calculate How the Buying Power of the U.S. Dollar Has Changed From 1913 to 2023. Get Inflation Rates and U.S. Inflation News. Click here to access calculator.