How to Plan a Total Cash Compensation Survey

Establishing competitive salaries can retain employees as the economy improves.

Determining appropriate pay levels for your work force is vital because competitive salaries play a critical role in attracting, retaining and motivating skilled employees. Organizations experiencing recruiting and retention problems need to ascertain that total compensation---base pay plus bonuses---are aligned with the market to compete qualified employees.

Things You'll Need

• One job description per organizational position to be surveyed
• Three salary surveys or online salary data sources

Instructions

1. Gather job descriptions for positions to be surveyed. You may want to survey a department the organization feels is underpaid or losing key employees. Job descriptions must include scope of responsibility, skills, duties, education and number of years of experience required.

2. Use traditional published salary surveys or online survey data. Unlike the print version of salary surveys, data from Internet surveys allows the user to print or download position data.

3. Match your jobs against benchmark job descriptions from salary surveys or online job descriptions. This is essential for accuracy because survey job descriptions may not use the same titles as positions within your organization. Your company may have an Accounting Coordinator, but upon reading various survey job descriptions, the best match may be Accounting Supervisor.

Tips & Warnings

• Check the sample size of the salary data. With low sample sizes, the data may be skewed because outliers may affect the average. Therefore, it is more precise to use the median rather than the average.

• Pay attention to the data's effective date---you may need to use an update factor to age the survey to the present. For example, a salary survey from 2009 is brought up-to-date by applying a percentage based on annual salary budget increase projections for 2009 to 2010. In a good economy, salary budgets may increase by 4 percent, while in a recession, salaries may only increase by 2 to 3 percent.

• Salary surveys are costly; an entire set of surveys covering executives, management, sales and professional/technical employees are different prices and must be purchased individually.

• Hiring a consulting firm will incur high fees, but this should be weighed against the level of effort and time it would take to do in-house.

References

• Onestep Compensation Guide: A Manual on Compensation Practicse & Theory
• Compensation Today: Creating a Salary Benchmarking Plan
• Pay Scale: How to Perform a Market Study: A Step-by-Step Guide, PayScale, Inc. with Sharon Koss, CCP, SHRP
• Society of Human Resources Management: 2010 Salary Increase Budget Survey: Thaw as Consumer Confidence Improves

Resources

• Morneau Sobeco: 2010 National Compensation Survey
• Mercer: ePRISM