Using salary market data can ensure you’re offering fair compensation to your employees and help you remain competitive when hiring.
It’s a no-brainer that higher salaries draw in better, more qualified applicants. Why, then, do some companies underpay and then come back shocked when their job postings don’t yield high-quality candidates? The answer could also be that they aren’t using market data to help them devise a sound compensation strategy. Salary market data helps companies understand:
- What their competitors are paying
- How and why applicants are responding/not responding
- What the top-rated companies in their industry are nabbing and retaining top talent
Where can I find salary market data for free?
You can get salary market data for free on sites like Indeed and Glassdoor.
Salary comparison websites, company reviews, and job boards such as Indeed and Glassdoor are excellent places to find reliable market data for free. Glassdoor even includes key numbers on job postings, such as “71% approve of CEO” and “40% recommend to a friend.”
There are a ton of sites and tools that offer glimpses at relevant market data. Often, though, more in-depth data sits behind a paywall. Even if you’re against paying for market data tools, it’s worth noting that a little extra money spent on quality software could mean the difference between explosive growth and stagnation.
The job question that costs you applicants
This is a big one. If this has been a required field on any job application you’ve ever posted, it’s likely that you’ve scared off great applicants. Don’t worry, though! This is why market data is so helpful; it can replace the need to just make lazy increases to a new hire’s previous salary. It can also ensure that more high-quality candidates respond to your job posting.
Determining someone’s salary based on their compensation history is unethical and limiting.
One of the most common ways companies determine salaries is by asking for a candidate’s salary/compensation history. Often, this is done instead of conducting market research and putting together fair salary offers. For decades, employers would use a prospective employee’s past salary to decide how well they would pay them. It wasn’t until recently that this approach started to shift. Not only is this unethical, but it’s also extremely limiting. It doesn’t take important factors such as experience level and skill set into account, and it can either lead to overpaying or underpaying your new hire. Fortunately, this practice has been subjected to some very deserved scrutiny in recent years. In fact, asking for past salaries is now illegal in places such as California, Massachusetts, and Delaware, and is frowned upon in most others.
Where can I get more comprehensive salary market data?
If you’ve got a bit more money to spend and want more comprehensive market data, there are paid tools for that. For example, Statista has tiered payment plans that help companies and individuals pick the pricing that works best for them. With GrowthBar, you can get access to important information on your competitors, which will help you determine if your compensation packages are competitive. That way, you can look at actual data rather than rely on guesswork.
Along similar lines, if you access this market data and are discouraged by how your salaries compare to those of your competitors, don’t worry. These are common issues. What matters is that you are seeking ways to improve it. That already sets you apart from many businesses.
But how can you make sure you’re creating a compensation package that’s fair and cost-effective? Well, here are a few handy questions that can put you on the right track:
- Does your company offer a reasonable compensation package?
- Are you transparent about what’s included in that offer?
- Are you willing to change it?
These may seem like simple questions, but your answers to these will help you gauge where you are.
These are all things to consider when analyzing your compensation philosophy, which, put simply, means where you stand morally on compensation and what skills/assets you deem worthy for higher pay. That matters, too, because it influences how you structure your pay and what value you place on certain positions or skills versus others. This is all important to examine and consider because it can easily lead to getting higher quality workers to join your company.
One of the most effective things you can do internally is ensure fair pay.
Actions your company can take today
Salary market data allows you to look at trends and behaviors beyond your company. This will help you assess what to change, what to avoid, and, if you’re lucky, how you can set a precedent for fair pay. That’s incredibly valuable. It’s just as valuable for you to look at your internal compensation philosophy and make amendments/adjustments as needed. One of the most effective things you can do internally is ensure fair pay. You can determine whether or not your employees are getting fair wages by conducting a pay equity audit.
Pay equity audits
What does a pay equity audit do, though? Put simply, it looks at how fairly your company handles and distributes money. It looks at who is getting paid more, less, and what kinds of things go into making those decisions. Bonuses, incentives, and equity programs will all be analyzed to help make changes where needed or highlight what you’re doing well or fairly. Basically, it’s a comprehensive look at how you’re compensating your employees, how you’re rewarding them for jobs well done, etc. That’s incredibly valuable, and it can equip your HR managers with actionable knowledge and a clearer idea of what they want from other staffers.
We find these types of audits very helpful. In fact, we strongly recommend that HR teams conduct compensation audits on a regular basis. That way, improvements are made consistently and HR managers have a firm grasp on what needs work and what doesn’t.
Also, in case you didn’t know, we have a compensation management tool here at Zenefits that can help you make necessary salary adjustments and attract more experienced applicants. We designed it to help guide you through the trickiness and awkwardness of money, and so that you can create a pay structure that works for everyone.
Additionally, if you need help with payroll, you can find answers to that and more by checking out our compensation FAQs.