5 Ways to Make Compensation Reports Work for You

Unless you are the Compensation Specialist in your HR Department, chances are you aren’t exactly thrilled when a compensation project comes across your desk. In the abstract, the idea of paging through hundreds of pages of compensation data tables or searching through complex (expensive) compensation databases can seem like an arduous and fruitless task.

But compensation data is so much more than that. Compensation data is a powerful tool that can and should not only make your life in HR easier, but can also provide valuable answers to critical questions that impact your organization in ways both big and small. Let’s take a look at a few imaginary scenarios, some of which might sound all too familiar, and then see how compensation data can help!

1. The Job Posting

Your IT department sends you a new job they are adding and need you to post it in your company’s online career center: “Network Systems Engineer”. Job title (check), job description (check), specific job duties (check), minimum & preferred qualifications (check), salary range (???). Great, you hardly understood what a “Network Systems Engineer” does, much less how much one should be paid. Now what?

Answer: compensation data! Especially for very specific job titles like this, compensation reports are pretty easy to use. If you find the exact job title & the job description looks similar, your work is done. If you can’t find the exact title, keep an eye out for cross-references to “alternative job titles” or delve in deeper to the job descriptions that any reliable compensation report should always include. We typically suggest a 70% match in terms of the job description in order to make sure you are comparing apples to apples.

Depending on how the job-posting process works at your specific organization, even after you pin-point that job, you may still have to go back to IT and make sure your numbers will fit within their budget or get some other type of administrative approval before moving ahead, but at least you have hard data to back you up!

2. The Questionable Source

John Smith from Accounting comes into your office with a print-off from “www.whatiknowishouldbegettinggetpaid.com” and insists that the data shows that he deserves a raise, today.

As we all know, if it’s on the Internet, then it must be true. And maybe it is. Maybe John Smith is 100% correct that he is underpaid. The going-rate is significantly above his current salary and his stand-our performance more than qualifies him for a pay increase. But even if all of that is true, that doesn’t mean that his source is going to get him the result he was hoping for by bringing you his internet search results. Now you, in HR, have some digging to do. You pull up your trusty compensation report with employer reported and job descriptions that have been matched to John’s title in Accounting.

While the data John brought to you isn’t a good fit, while you are looking through his file you notice that with his extra certification that he got last year, and the years of service that he has had at your organization, according to your compensation report, he is in fact underpaid. Now, he is going to have to wait until the performance review process finishes up next month, but you can go back to his supervisor and talk things through to make sure John’s salary is adjusted accordingly. After all, you wouldn’t want to lose a top-performer like John.

3. The Management Meeting Metrics

Before a recent top management meeting your COO asks you to bring some metrics to present to the group. When you pull the data in preparation for the meeting you realize that your turnover among your production staff is sky-high in comparison to other local organizations in your industry.

Knowing she will want to know the “why” behind these metrics, you pull comp data for your line workers out of your HRIS and compare it to the last several years of compensation surveys for Assembler at the Entry, Junior, and Senior levels. You can quickly see from your analysis that your “senior” folks are being paid at the “junior” level.

Sure enough, at the big management meeting, your COO asks about the high turnover and you are able to explain that the company may be losing many of these more experienced employees due to the pay offered by your competition. This of course leads into a much larger conversation about your organization’s overall compensation philosophy (do we even have one on the books?) and what the logistics of getting some of these longer tenured employees up to a more competitive hourly wage might look like. But you’ll have to set up another meeting to hash all of that out with a smaller committee.  

4. The Union Negotiation

Union negotiations are coming up next month and you have been tasked with bringing compensation data to the table. You have a pretty good working relationship with the union reps, but you know that these negotiations always get people a bit on edge.

You know that your organization is counting on you to provide them with the most accurate data out there when it comes time to counter the proposed union contract, a source that can stand on its own if negotiations start to get messy. So, you turn once again to the strongest data can you find—your local compensation survey report.

You are confident that the hourly wages you pull out of the report are competitive and unbiased, so it should keep the union happy as well when it comes time to compromise. You know the source well and that the data wasn’t just collected and reported out without undergoing an intensive data analysis process first. For example, as is best practice in comp analysis, data was removed if a single employer dominates a job title and would skew the final results. The data is also responsibly reported, with a minimum sample size of at least 5 employers for each position and breakout. Not only does this ensure that the data is truly un-identifiable, it also ensures that the various statistics (i.e. quartiles, mean, etc.) are meaningful.

5. The Out of State Candidate

After an extensive recruitment process, you find out that your top candidate for a key business development position has received another offer in NYC, where they currently live. Clearly you can’t compete with straight dollar figures in The Big Apple, but you can get better informed about the market in NYC.

In addition to your local compensation survey report, national compensation data with regional geographic breakouts can come in handy when recruiting nationwide. Particularly for higher level positions that might involve additional types of compensation outside of just base-pay, knowing what the national market looks like can be a huge advantage.

Maybe after a bit of back-and-forth, throwing in some relocation expenses, and explaining how much lower the cost-of-living is outside of the big city, the candidate accepts your organization’s offer. She simply couldn’t say “no” to the great long-term benefits package that you put together, not to mention the fantastic flexible workplace culture that she had been looking for all this time. Sometimes finding the right fit for your organization goes a bit beyond what even your must trusted compensation resource can tell you!