Employee Salary & Benefit Surveys: Uses & Importance

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Salary surveys provide a unique set of data to businesses looking to set wages and attract and retain top talent. In this lesson, you'll learn more about the uses and importance of salary and benefit surveys.

Creating a New Position

Imagine you're the HR director of a small chain of retail stores and you've been tasked with hiring for a new position that you've neither had before, nor have any familiarity with. How do you determine important employee numbers such as salary and benefits? How can you create and advertise a position that will attract and maintain a quality employee? After all, if you underpay a position, an employee will likely start looking elsewhere. And if you overpay, you run the risk of damaging your business's bottom line.

That's where employee salary and benefit surveys can play a critical role. Read on for a closer look at what these surveys entail and how they can be useful in your HR director role.

Surveys Defined

There are a bunch of different names for these types of surveys, including wage surveys, salary surveys, and compensation surveys, but the general definition is the same. The surveys offer a compilation of wages from other businesses that can be analyzed and compared to your own organization. These surveys draw information from numerous employees for various job categories and can be broken down by geographic area, market sector, or even the particular job type. The best results will be obtained from organizations of a similar size and focus as your own. If you are a mid-sized law firm in a small market, for example, it may not be advisable to compare salary requirements with a large firm in a big market like Los Angeles.

It may seem strange to essentially 'consult' your competitors to help make determinations inside of your own organization, but it can be hugely helpful toward understanding how businesses compensate employees and keeping your own organization on par with others like it. And, just like you can see the data from other businesses, your own business can contribute its data to the sharing culture. Many organizations conduct salary surveys such as industry associations, educational institutes, and the government.

Salary surveys are important enough that a full 80 percent of human resource professionals said they were consulting them in their business, according to a recent study.

Purpose and Uses of Salary Surveys

Salary surveys serve many purposes, ranging from wage determination to competitiveness in the marketplace to internal salary equity concerns as they arise. Let's take a look at some other benefits of salary survey usage:

1. Salary surveys help determine wage levels, or how much you'll pay for certain positions. If a line assemblyman across town is making $25 an hour, and you've determined to only pay $12 an hour, how long do you think it'll be before your employee makes his way to the business on the other side of town? Probably not long.

By consulting a salary survey, a business is able to strategically determine various wage levels based on the market rate for the type of job performed, responsibilities, education level, experience, and other components. By doing this, an organization is able to set its salary structure company-wide, which can help decide how many and what types of employees can be hired.

2. Salary surveys help uncover wage trends, or fluctuations in compensation. Over time, with changes in the job markets as well as supply and demand, the numbers in a salary survey will change, fluctuating up or down based on need and importance. Referring to salary surveys over a period of several years can help human resource professionals determine new positions, wage increases, fluctuations, trends, or jobs on the decline.

3. Salary surveys can identify the compensation structure. There are multiple parts of a salary package to be considered, including base pay, incentives, retirement plans, bonuses, and benefits. Researching survey data can help an organization break down how to divide compensation among the various available categories.

4. Salary surveys can be used in internal wage decisions. Whether negotiating with labor groups or deciding how to plan for salary increases, these types of surveys can assist human resources with making wage decisions and increases that are competitive among businesses of their type in the labor market.

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