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Article:

Responding to Online Salary Data

Salary.com estimates that at least one employee in ten has viewed compensation information on the Internet within the last year. That number is expected to grow, as salary sites have become a routine component of both the job search and the career management process. In response to questions from HR professionals about what to do when an employee knocks on the door with a salary printout in hand, Salary.com has prepared this advice for and from employers on responding to online data.

There probably is no way for employers to prevent employees from using salary sites, and no advantage to doing so. Besides, organizations that pay at or near the market can benefit from third-party validation of their practices. So HR professionals should consider directing employees to the most accurate sites, with an explanation of why those sites are good. An HR professional should explain why the data might not be perfectly in line with data for their organization's reference group. Employees will respect an honest assessment of the information available on various sites. For credibility, companies should not direct employees to sites that provide unilaterally low figures just as they wouldn't direct employees to sites with inflated numbers.

Companies should anticipate that knock on the door
Companies should assume that employees will eventually walk into the office with a salary report detailing market pay for their job. That way, when it inevitably happens, the employer can be prepared and avoid seeming defensive. The best response is to show openness toward the employee's research. The company should use the opportunity to open a dialogue about the organization's pay philosophy, how pay is determined, how pay and performance are related, and how employees are matched to benchmark jobs.

Companies should look at this is a great opportunity to educate the employee, open the compensation "black box," and become a trusted HR representative. Often the individual's real concern is not just pay. The employee wants to be heard.

An HR representative should listen and look for cues that the employee is concerned about fairness, performance, promotion, etc. An HR representative should start by asking the employee which salary sites he or she looked at. The employee can be referred to other sites more frequently used by the company with an explanation of why. Regardless of the site, the job description used should be looked at carefully. Employees often match to job titles rather than to job descriptions, so the HR representative needs to be able to explain why it is important to match to job content rather than title.

HR representatives should visit sites themselves
Employees will tell their coworkers about the salary sites they find valuable, so it is important for an HR professional to become familiar with the sites workers most frequently reference. It is important to note the strengths and weakness of the most common sites as well as to be comfortable explaining the difference between the data and methodology used in the company compared to what the Web site uses.

When surfing the sites, keep an eye out for warning signs that signal a bias or that introduce problems interpreting the data. For example, vague job descriptions are a major cause of confusion within salary sites. Beware of language like, "responsibilities too numerous to mention" or "cannot be classified." Also, look for words and phrases that communicate a bias, e.g., "are you underpaid?" or "are you being cheated?"

Consider the data in its context
Chances are that companies are most likely to hear from employees only when they find a higher salary than what they are earning, so it may seem as though data from online sites is high. Another reason the data might seem higher is that the job description may not be a match. Self-reported data is most likely to be exaggerated on the high side (whether intentionally or by inexperienced benchmarkers). Data published by recruiters may appear high because it represents the top of the market for a given job. Regardless of the source, some sites report lower data because they use older data and/or do not age it. Knowing when and where the data originated can provide information about what is being reported and how relevant that is.

Another consideration with online data is that the numbers may not bounce up and down from one year to the next the way they do in surveys. The reason is that the population within a survey can change from one year to the next, altering the corresponding year-over-year pay figures. Some online sites aggregate data from numerous sources. These sources naturally tend to be smoother because a high data point one year will tend to go lower the next, and vice versa, in a regression to the mean. Some online data sites also adjust for anomalous data points. They remove, adjust, or correct inconsistent data points.

Use online data that meets your standards
HR professionals can use online data provided that the data is valid and that it is used appropriately. Certainly companies should use online data published by currently used offline sources; its appropriateness has already been determined for the business. In addition, new data providers may also have data that can be used if their methodology and sources meet established criteria. Many sites, for example, are useful for quick spot-checking of other information. Companies should use ones that they like, understand, and have validated. It is also encouraged to call or email the site publisher if anything is in need of clarification. Professional standards should never be sacrificed for convenience.

Companies should validate an online compensation data source as if it were any other source - print or otherwise. The accuracy of the data will speak for itself. So it is recommended to use multiple, like sources whenever possible, comparing the unfamiliar source's data to familiar, trusted sources. Also, reviewing the methodology and determining whether the data comes from a poll, a survey, a meta-survey, or market pricing is important. Companies should assess the "comp"-etence and the agenda of the data provider.

Companies should educate employees through the new salary negotiation

The arrival of online data has sparked new conversations between HR professionals and employees in businesses nationwide. These new salary negotiations are part of a process of educating the workforce to understand compensation principles such as the link between pay and performance. In an ideal new salary negotiation, employer and employee will follow a process similar to this one:

  1. Agree on a benchmark job.
  2. Agree on the employee's proficiency and performance level.
  3. Agree on the market value of the job.
  4. Agree on where the employee's salary should fall.
  5. Agree on what performance is necessary for future salary increases.
  6. Negotiate for a win-win.