Late summer to early fall is when a number of HR consulting firms and associations release the results of their annual salary increase surveys, with projected increases for the coming year. HR professionals responding to these surveys indicated that they expected average raises of between 2.6% and 3.1% for 2014, taking into account all industries, positions and locations.
Many of these surveys, however, provide much more detailed information, enabling organizations to benchmark their proposed increases for particular positions against those projected by industry peers. Employers are usually required to purchase this comprehensive data, as well as spend time completing the survey.
In order to ensure they receive the maximum benefit for their investment, how should organizations determine which survey to take part in, position these numbers in the context of other budget factors and utilize the available data?
Survey selection
Is one survey better than another? “The methodologies of the surveys conducted by the major consultants and professional associations are certainly comparable,” says David Van De Voort, a principal with Buck Consultants. In fact, who answers may be more important than what is asked. Potential participants should ensure past survey participants include organizations that are comparable in terms of size and “more importantly, industry,” according to Michel Dubé, a principal with Morneau Shepell. That way, they’ll get the “right data to support appropriate decision-making,” states Sandra McLellan, Towers Watson’s rewards, talent and communication practice leader.
Another criterion for selection is the number of participants. “In statistics, bigger is always better,” states Philip Johnson, Hay Group’s global head of work measurement and Eastern Canada leader of consulting operations. However, the numbers do not always tell the whole story. “Some surveys count multiple locations of one company separately, so it’s important to look at the composition of participants as well as the number,” says Johnson.
Van De Voort agrees. “The survey may have a lopsided participant group—a high percentage of financial services or healthcare respondents, for example—which will shift overall results.”
A third consideration is how the results will be shared. “Different surveys tend to report data in different formats,” says Johnson. “Organizations should be careful to ensure they interpret the information correctly. There is no standard format for reporting.” Survey vendors will generally be able to provide sample reports to prospective participants.
Placing survey results in context
While surveys are an important part of the equation, it’s clear that survey results are not the only—or even the primary—consideration when an organization determines its annual salary budget. “Organizations assess their own internal budget first and then consider external factors such as salary surveys and the economy when finalizing their salary increase budget,” states Steven Osiel, Pal Benefits’ vice-president, total compensation. “External survey results serve as a gauge against which employers can tweak initial internal budget numbers up or down to ensure they remain competitive.”
Those conducting the surveys believe it’s important for organizations to consider the results in context. Dubé points out that salary increase forecast surveys “are based on perception of future market direction.” Van De Voort agrees that results should not be viewed as “some sort of Truth with a capital T.”
Nevertheless, the numbers are obviously important information to the thousands of organizations that participate in Canadian salary increase surveys each year. “The results are an absolutely valid point of reference,” McLellan explains. “But they shouldn’t be viewed in isolation from other important data and information.” Nick Bishop, senior principal with Hay Group, adds, “All the leading salary surveys seek to determine the most accurate prediction of the salary market. Organizations use the information to contribute perspective to their salary planning.”
In fact, Osiel suggests that “employers may want to consider responding to more than one of the larger surveys as part of their market analysis” in order to broaden that perspective. “The research required internally to find the answers is essentially the same for all surveys, so it is little extra effort to respond to multiple requests,” adds Johnson.
Value of survey results
The question arises as to whether or not data collected before salary budgets are finalized is actually meaningful. Bishop responds that “provided there is no major economic change halfway through a year, then results are usually highly reliable.”
The national, regional, industry-related and size-specific average numbers available through annual salary increase surveys are useful in order to benchmark an organization’s position against its competitors. However, Dubé explains that only those employers that “have the capacity to adapt to market competitiveness” are likely to use this data to any great extent.
The bottom line for organizations considering participation in one—or more—salary increase surveys is that the results will provide them with “general landscape,” according to Osiel. “External numbers won’t build the internal business case for salary increases in any given year, but they are part of the decision-making process.”
Marcia McDougall is a freelance writer and president of InteGreat Marketing PR Events. mmcdougall@integreatmarketing.com
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