Salary Survey Basics

March 8, 2008

A salary survey is a useful management tool. It can greatly simplify an organization’s human resource management. By comparing a company’s salary structure to its labor market, the business can be sure it is not under- or over-paying its employees. The internal equity of the company’s jobs is clarified when their external parity is measured. Timely surveys keep the organization’s salary structure up-to-date and competitive. An effective salary survey simplifies a company’s human resource management.

…helps avoid over- or under-paying company employees..

Labor dollars are the greatest drain on any company’s resources. As precious as they are, the organization should ensure that it is not paying more than the market demands for worker talent. By the same token, the company should avoid paying salaries that are appreciably lower than its labor markets. If the business scrimps on salaries, needed talent will be taken by those companies paying competitive salaries.

…clarifies external parity and internal equity..

Completing a salary survey provides data that clarify how particular jobs, and subsequently the entire salary structure, compare to the labor market. These data are vital to making salary administration decisions. Surveying the labor market can also help establish the relationship of positions (internal equity) within an organization. Once a survey is completed, the company can decide the degree to which salary levels should be adjusted; or whether they should be adjusted at all.

…keeps the salary structure up-to-date…

Labor markets change too quickly to allow too much time to pass between compensation reviews. If the company waits too long to compare itself to its labor markets, it may require too much money to “catch up” to the market. The organization’s expenditures of labor dollars should keep pace with the labor market. As a general rule, two years should not pass without a thorough salary survey. Regular surveys will provide the data needed by the organization to keep its salary structure current…and, therefore, competitive.

…simplifies human resource management.

Labor dollars are any organization’s greatest expense. Consistently comparing the company’s salary structure to its labor markets is an effective strategy; ensuring limited resources are appropriately applied to recruiting and retaining worker talent. Regular salary surveys can:

· Help avoid over/under-paying for worker talent;

· Clarify external parity and internal equity; and

· Keep the organization’s salary structure up-to-date.

Salary Survey Basic Steps

Identify benchmark jobs and survey participants.

Develop the survey questionnaire including brief descriptions of benchmark jobs.
Mail the survey instrument to survey participants.
Follow-up with participants via mail and telephone.
Statistically analyze the survey results and adjust the compensation system as necessary.

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