How HR Uses Salary Surveys

Instructor: A. Casey Carr-Jones

Casey Carr-Jones holds a Bachelor's degree in English & Psychology. She is currently a PHR-certified Human Resources Consultant.

Determining the compensation for employees is an important function of the Human Resources department. A tool they use to do this is called a Salary Survey. This lesson will discuss what a salary survey is, how to use it, and why it's important to compensate employees fairly.

Determining a New Salary - Too Big or Too Small?

Bob and Janet are Human Resources employees for Fly Now Airlines. They are meeting to discuss the job offer for a new Operations Manager, specifically, his salary. Bob suggests one salary amount, and Janet shakes her head. Bob then suggests a different salary amount, and Janet laughs and says: 'It's like the story of Goldilocks and the Three Bears. The salary can't be too big, or too small. It has to be just right. Let's pull up the most recent salary survey for an Operations Manager.'

Utilizing the research of salaries using a Salary Survey, like Janet suggested, is critical to ensuring an organization is adequately compensating its employees.

What Is a Salary Survey?

A Salary Survey is a tool used by companies to determine fair and competitive compensation for a position. The survey contains compensation data based on position, industry, location, size of company, and several other variables and shows the average salaries for different roles. When you view a position's compensation data, you are often presented with a range of incomes, including the average compensation for that position.

Salary surveys can be data sheets or interactive programs online. There are both free resources and resources you can pay for to access this information. The timeliness, customization, and level of detail a company needs will determine which resource is best.

Benchmarking Positions

When HR uses a salary survey, they perform a task called benchmarking. Benchmarking is the process a business uses to compare key metrics, in this instance, compensation data. Think of it as a standardization metric like a ruler. A company is comparing the compensation of the position in question (in the example above, an Operations Manager) to the compensation of that position at other companies. This allows HR to see how each role 'measures up' to industry standards.

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