Can the Internet Help You Hit the Salary Mark? - online salary surveys

Quick decisions and the right salary offer can mean the difference between nabbing the perfect job candidate and losing out to the competition in today's tight labor market. Enter the Internet. With its economies of time and scale, it might be just the ticket for time-strapped HR officials. Now, companies large and small can access salary and survey data either from third-party aggregators and consultants or simply by keeping tabs on the job market via the virtual want ads anytime and almost anywhere. All it takes is an Internet connection.

Determining competitive salaries typically requires HR officials to analyze reams of data, including salary surveys that fill thick three-ring binders, take up huge spreadsheets, and can cost thousands of dollars. There are hundreds of surveys, with all kinds of price tags. Some of the well-known consultants that offer subscription or for-purchase surveys are William M. Mercer; Radford Surveys, a division of Aon Consulting Worldwide; Hay Group; Towers Perrin; and Watson Wyatt Data Services. The U.S. Bureau of Labor Statistics also has surveys, but the data isn't as current.

Just getting the data in hand can take up valuable time, as does matching job descriptions with job openings, extrapolating numbers, and adjusting them for geographic differences. For small companies without designated full-time HR staff or those that can't afford sometimes expensive surveys, the whole process can be out of reach.

The Web can change all that. It's about issues of data richness and reach, says Paul Platten, national practice director Strategic Rewards for Boston-based Watson Wyatt. Strategic Rewards is the name for the company's salary management and compensation area. The company currently is beta-testing Reward, a salary planning and evaluation tool.

But the Internet is a new kind of tool, and companies' use of the technology as well as the available options are limited. Today, the Internet is just one more way to get the same information. How it's delivered is irrelevant, says H. Michael Boyd, a human resourcing strategies research analyst with Framingham, Massachusetts-based International Data Corporation. For many companies, it's also too cumbersome to cut through the volumes of survey data on the Web.

Companies today still like to have the paper in hand, agrees Edward W. Straub, New York-based president of Compensation Consulting Group, Aon Consulting Inc., the powerhouse that includes Radford Surveys, online as Radnet.com. Radnet is a Web-based database of compensation data and practices that allows clients who participate and purchase the survey to click on the site, plug in data, and manipulate it for their needs.

Acceptance is growing, however. Over the last 12 months, as people have become more comfortable with the Internet, Straub says, he has seen a dramatic increase in salary-and compensation-related Web sites coming online and in companies turning to Web delivery. He predicts an accelerated increase in the next couple of years because of the speed and cost savings of the Internet. "I also believe that we will find that hiring managers in general will start using the Web probably more aggressively than HR ... often as part of negotiating a salary and dealing with recruiters. Hiring managers would like to have tools they can reach out to quickly and get a ballpark figure on what a job is worth, what the elements of a total compensation might be."

Here are three different-size companies that capitalize on the Web in salary benchmarking. Each has its own approach to using the Internet, yet all recognize the time savings, efficiencies, and even drawbacks of the process.

Small company

Just because a company is small and may not have deep pockets or want to pick up the tab for compensation consultants doesn't mean its HR staff can't benchmark salaries accurately and competitively with the help of the Internet.

Vancouver-based StockHouse Media Corporation is one company that does just that. The international provider of online financial content and community development products has 210 employees in the United States, Canada, United Kingdom, Australia, Japan, Hong Kong, and Singapore. Shawnee Love, StockHouse global director of human resources, uses the Web in combination with traditional benchmarking methods when pegging salaries for everyone from Web designers and developers to secretaries.

E-mail is a main communications tool that Love uses to request salary data from professional groups she belongs to such as the Human Resource Management Association and High Tech Exchange Group, or to participate in salary surveys. She and her staff also informally keep tabs on going rates and trends in the marketplace and at specific companies via job boards, industry organizations, online databases, and company Web sites. "We source information that is both industry-related as well as functionally related and of varying geographies, such as state, provincial, country-wide versus marketing, sales, HR, tech, etc.," Love says.

Among the sites she frequents are e-recruiting destinations such as Workopolis.com, Monster.com, Careermosaic.com, and HotJobs.com. Salary.com, a free salary survey site that targets individuals as opposed to employers, is another source. The site is popular among many companies of varying sizes even though it draws plenty of criticism from compensation experts for the reliability of its data.

The nonprofit industry group World at Work, the former American Compensation Association, issued a formal caution at the end of November against free salary survey sites, though it did not mention Salary.com by name. The group, which has more than 26,000 members, also suggested guidelines for finding the right site and the right data.

Compensation expert Briana Bennett also is wary of Salary.com. Its methodology isn't clearly defined, says Bennett, the president of Redmond, Washington-based ERI Economic Research Institute (www.erieri.com), a company that analyzes third-party salary surveys. Nonetheless, HR managers from companies of all sizes heavily traffic the site. Few, however, may be willing to admit it, she adds.

Salary.com defends its reliability, and states that its free database has information on more than 1.3 million incumbents and 5,000 companies. The data also is adjusted or aged to accommodate the movement of salaries over time. But even Salary.com advises a cautious approach to its data. "If a job description is a 'pretty good' match but not perfect, the differences in the skills, experience, and knowledge could translate into a difference in market compensation," says Nate Soucy, a spokesman.

The Internet can be a great time-saver and a solid source of information if it also involves due diligence on the part of HR staff, says StockHouse's Love. That includes checking numbers and verifying source data, There's plenty of unreliable data without adequate source and methodology information that can make the essential job matching a guesstimate at best. "When I say I check it, I really, really do. I check a lot of different places."

Plus, interaction with the Web is only one part of the benchmarking process. Love, who has seen company employment jump by 140 people over the last 14 months, starts with what she says is the more complete traditional three-ring-binder salary survey purchased from a reputable third-party group like Towers Perrin. The price: anywhere from $1,000 to $10,000, depending on who is doing the survey and the extent of the data. Other good survey sources, at least in the high-tech space, she says, include the Vancouver-based Western Compensation & Benefits Consultants, KPMG Group, Mercer, Radford, and Aon.

She uses this data to set a base salary. Then, because the paper copy is out-of-date almost immediately, the Web is a source for double-checking those numbers with the marketplace.

If a number or something else doesn't make sense, check it out. Consider the case in which a job candidate came to Love with a Web site posting offering a ridiculously high amount of money for a position. She looked further, and discovered that the company had a reputation of being a difficult place to work. As a result, it offered big sums of money to draw talent. StockHouse opted not to match the salary.

Despite situations like these, the Internet still gives Love, as an HR manager of a small company, access to information that a company her size might not ordinarily have and certainly didn't have before the advent of the Web. In turn, that information boosts her HR team's credibility in the recruiting process when it pegs "fair market" salaries. That alone saves time and money. "You don't have an employee saying to you that your paper copy is out-of-date. You don't have to buy a salary survey every three months. You can check it on the Web and keep pretty up-to-date fairly easily."

If you're looking for free and fast information on the Web, Love suggests that the best sources are e-recruiting sites like Monster and Workopolis. Seeing what other companies are willing to pay for similar positions can provide a solid salary range. Start with a needs assessment of your company. Questions to ask are, realistically, what positions are open, what need is the company trying to meet, and who is the competition? A small company like StockHouse might not need information on what IBM is paying for the same position, or to purchase a big-dollar survey with unnecessary data.

Once on the Web, check out not only the salaries but specifically the research and methodology behind the numbers, and be wary of any company not willing to explain the origin of their data, adds Love.

Medium company

Although some compensation experts are leery of Salary.com, that's not the case for Christi Shade, assistant to the director of human resources for Wichita-based Restaurant Management. The company, with 2,200 employees, has 150 Pizza Hut and 20 Long John Silver's restaurants in eight states--Arizona, Kansas, Louisiana, Montana, New Jersey, New Mexico, Oklahoma, and Wyoming. That staff includes 320 mid- and top-level managers that can make up to $85,000 a year.

Last September, when the company was trying to decide whether to buy the outlets in New Jersey, Shade was given the task of finding out the fair-market salary ranges for managers and assistants there. Despite its size, Restaurant Management doesn't subscribe to third-party salary surveys or, for that matter, need the in-depth data they provide on a regular basis. For similar assignments in the past, Shade had to count on outdated data from state departments of labor.

This time she clicked on Salary.com. The information is accurate, current, and quick, she says. "I can go right onto Salary.com and type in state information, even down to counties, and get competitive salary rates."

At first, Shade says, she was wary because the site wasn't designed for HR officials. But as she started to use it--and double-check numbers against state labor departments' data as well as compile company data and her own cumulative market knowledge--she found it extremely accurate. She admits that, although the site's job descriptions and data met her needs in the fast-food industry, it might not be detailed enough for other industries. And she still adjusts the numbers, for example, factoring in variations for the type of restaurant-- dine-in or delivery. But they're a good starting point.

"I didn't take Salary.com at just face value," Shade adds. "I knew what it had originally been designed for. I did take quite a bit of time ... to check information that I already had against reports we had in the past, and it was extremely accurate."

As for those who fault Salary.com for not being upfront with the details, Shade suggests that perhaps they just don't ask for the information. The site always has been forthcoming and helpful when she has had questions on data sources and otherwise. "But if I have a question, I do ask. Maybe that's the difference."

The use of Salary.com saves Restaurant Management officials not only time--salary information is a few clicks away, whereas ordering a survey offline can take weeks--but also the cost of purchasing Labor Department data. That can be $8 to $50 a report, depending on how detailed it is, says Shade.

StockHouse Media's Love agrees that the information source may not always be clearly stated, but if she wants to peg a salary range and a Salary.com number seems out of line with the other sources she uses, it's a simple matter to discard the number. "At the same time, if my [paid] salary survey, plus the information I am getting from my professional exchange group, plus Salary.com are all pretty comparable, I really think that that's a fairly accurate representation then for a salary."

Large company

Bernie Rodgers admits he checks out Salary.com every so often, too, but not as a salary benchmarking tool. "I know many of our employees will be out there looking at it," says the manager of compensation planning for Air Products North America, part of chemical and gases giant Air Products and Chemicals, Inc. The Allentown, Pennsylvania-based company has $5 billion in annual revenues and 17,000-plus employees in 30 countries.

In his role with Air Products, Rodgers designs programs and sets guideline benchmarks for the company's competitive compensation salary programs. Divisional HR managers in turn carry out much of the day-to-day administration and planning.

Early on, Air Products opted for a Web-based solution to help in determining salaries. That solution comes in part from the Hay Group and its subscription online compensation database, Hay PayNet.com. The reliability of the data and its accessibility and convenience are the big reasons for using it, says Rodgers. The cost for PayNet ranges from $2,500 to $7,500, depending on the country involved.

By fiscal 2001, Air Products will be using Hay PayNet in a number of countries, including the United States, Canada, Mexico, Brazil, Spain, Portugal, and Korea. Basically, the system is an online compensation survey database that allows the user to look at benchmark jobs and see the results by pay line, whether it's by function or salary grade level. "It's more convenient and very flexible in the sense that instead of having a bunch of three-ring binders floating around my office, once you get used to understanding how to use the Internet approach, it's online and available so the information is there at your fingertips virtually," says Rodgers. Because the database is so big, however, it takes a few sessions of working with it to fully understand how to use it, he adds.

Like many of his counterparts at smaller companies, Rodgers counts on multiple surveys. He likes Hay and Towers Perrin because, he says, both have quality organizations that put the same effort into their Internet databases as in their published reports. Also, different consultants seem to have better approaches to different aspects of the market. Rodgers likes Hay for the flexibility in allowing a user to slice and dice the database. He can select a particular job, then pull up data on a single industry or multiple industries by geographic locations or company sizes and more. He uses the Towers Perrin surveys to focus on management analysis. Another Towers Perrin database survey, for example, actually helps him to look at whole job families like Air Products' finance family. The survey compares entry-level, career mid-level, and high-level individual contributors.

Rodgers is a bit wary of ad hoc salary surveys from many professional organizations that are published on the Web and appear on the surface to be fairly authoritative. "You can get a lot of free information from the Internet, but you don't always get a very good explanation of the approaches that they have taken to compile the data and what they've done to ensure quality control."

And the surveys are just one aspect of setting competitive salaries. Other factors include total compensation packages in line with Air Products' business strategies, as well as trends inside and outside the industry.

The biggest advantage of using the Internet in the entire process, says Rodgers, is the time savings. He doesn't have the time to dig through binders of information and do manual analysis. And in the time it would take to contact a consultant for ad hoc market pricing requests, he can log on to the database and extract the data himself. He's also looking at broader outsourcing of the process. But even if that were to happen, some internal work would still have to be done for a clear understanding of what a job at Air Products entails, and how it compares with a survey benchmark job. Rodgers says: "You want to be sure you are talking apples and apples."

Susan J. Marks is a freelance writer based in Denver.

What To Look For in a Salary Survey

World at Work, a nonprofit industry organization that is the former American Compensation Association, offers a few suggestions for checking out salary survey data:

* Make sure the surveys you use match the correct labor market and job category. Don't rely on job titles alone.

* How many sources are appropriate for your needs? Using a number of survey sources helps avoid any particular bias of a single source.

* Get management's support for using survey data so that time and effort are not wasted.

* Assess why you want the survey data. That includes which jobs need to be listed and the appropriate labor markets, both geographically and by industry.

* Use reputable sources to find surveys. There are companies that specialize in cataloguing salary survey sources and maintaining information about them.

What makes a good salary survey?

* The sample size has to be large enough to ensure that the information is valid.

* Valid and useful surveys readily identify their key elements, including effective date of the data, term definitions, clarity of statistics, and position descriptions. Aggregate or summarized data also should be reported, and data collection, screening, and verification techniques identified to ensure that the survey was properly conducted and reported.

* Survey sources and sample sources should always be identified. Reputable organizations should be willing to reveal the source of their sample to show that the data is both valid and accurate.

* Be cautious when reviewing free online survey information. Numerous issues can affect the reliability and validity of the data reported. A key concern is how data is collected and reported.

* Make sure the data is current.

COPYRIGHT 2001 ACC Communications Inc.
COPYRIGHT 2001 Gale Group