Why Compensation Data is Crucial to Compensation Management

Designing the “right” compensation package for employees can sometimes be tricky and challenging. There are many factors that you need to consider when customizing a good compensation plan and one of those is compensation data.

Compensation data plays a key role in providing valuable information about the pay range within your industry that would help you create a fair and competitive compensation plan.

What is compensation data?

Compensation data are information gathered from several employers through various means such as surveys and are analyzed to benchmark pay practices across industry standards. The data collected may include salaries, allowances, merit increases, increase percentages, and other quantifiable factors.

Importance of salary data to your compensation management and benefits

Salary data is crucial to effective compensation management and benefit programs. With this information, companies can make informed decisions on how much they should pay and what benefits are to be provided to an employee.

Without compensation data, it may be difficult for companies to attract and retain excellent talent, impacting productivity or leading to high attrition rates.

Where to find the right sources of your compensation data

There are several sources you can tap into to gather the right compensation data for your business. These resources may include:

1. Government Data – The S.  Bureau of Labor Statistics is one of the best sources of salary information. It provides free and publicly available information on salaries across different occupations and industries.
2. Online Databases – Online databases, such as Salary.com, collect compensation information and allow users to access the details by searching through specific job titles and locations.
3. Salary Surveys – There are several salary surveys that gather data from companies on salary ranges and benefits. This information is used to determine how much the average pay is for a specific job or industry. Salary.com offers the largest, most comprehensive selection of salary surveys available.
4. Professional Associations – There are professional organizations that collect salary data that is provided to their members. These groups such as the American Institute of Certified Public Accountants, the American Bar Association, and the National Society of Professional Engineers provides their services focused on their industry or job roles.
5. Custom Surveys – You may also conduct your own surveys, which are customized specific to your own industry. Custom surveys can help you tailor your compensation packages depending on your compensation data.

How to Evaluate Your Compensation Data and Compensation Data Needs

Evaluating the compensation data is crucial to ensure that your compensation plan is aligned with your business needs while remaining competitive in the job market. Here are some steps that will help you evaluate your compensation data:

1. Determine the components of your compensation package

Identify the types of compensation you are currently providing your employees with, like base pay, bonuses, retirement plans, etc.

2. Research industry benchmarks

It is important to know the industry benchmarks in your field to make sure that your compensation and benefits package is competitive. Salary.com provides a comprehensive set of industry benchmarks for over 5,000 discrete jobs.

3. Review your compensation plan

Check your compensation plan for any gaps or areas that require improvement. One example you need to watch out for is areas showing your employees being underpaid.

4. Conduct your own salary survey

Use your data to compare how your compensation package fares with the other companies in your industry and make changes when necessary.

5. Consider total compensation

It is not only the base pay that you should consider when evaluating your compensation package. Other benefits, such as medical and dental insurance, should also be considered when you evaluate your compensation data.

Accurate compensation data plays a key role in creating a competitive and fair compensation package. Looking at how much the other companies are paying for certain roles, the information you have collected can help you keep your compensation package at par with industry standards.

Compensation data can be an effective tool not only for getting top talents on board but can also help you retain your best employees.