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Utilizing compensation market data is a critical factor in helping organizations succeed.
To stay competitive, companies need to keep a finger on the pulse of pay rates with access
to current and accurate market data.
Knowing the market rates for specific jobs is essential to attracting top talent and retaining
star performers. By market pricing the external value of individual jobs, companies can
confidently create competitive pay plans and allocate compensation costs wisely and
in the right places.
The following article highlights results from the
2011 Culpepper Compensation Market Pricing Practices Survey.
Topics covered include sources of market data used for compensation analysis,
use of employee-provided compensation data, and use of compensation market pricing tools
and technology.
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Compensation surveys with job-specific, employer-provided data are by far the most common source of compensation market data.
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Over 70 percent of companies avoid using surveys and resources containing compensation data self-reported from individual employees. Another 15 percent only use surveys with data collected from individual employees when no other resources exist.
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Over 85 percent of companies that use compensation surveys use multiple surveys.
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Approximately one-third of companies use compensation consultants as a source of compensation market data.
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Three out of four companies use spreadsheets for analyzing and managing compensation data.
For companies using market data to analyze compensation and set pay levels, the most common source
is compensation surveys conducted by third parties (Figure 1). Nearly ninety percent of participants
reported using compensation surveys with job-specific, employer-provided data as a source of market
data for compensation analysis.
Compensation consultants are the leading non-survey source. It is worth noting that many compensation
consultants rely on compensation surveys for market data. Thus, the percentage of companies directly
or indirectly using survey market data for analyzing compensation is actually higher than reported
below.
Other relatively common sources of compensation market data include government labor databases
(e.g., U.S. Bureau of Labor and Statistics, Statistics Canada), recruiters, job postings, and proxy
filings for executives and directors in public companies.
One out of six companies reported that they use pay data gathered in job interviews and new hire
employment verification as a source of compensation market data.
Participants reporting “Other” indicated a variety of sources, including tax filings (e.g., U.S. IRS Form 990 for nonprofits) and attorneys (i.e., H-1B visas).
It is widely considered a best practice to use compensation surveys conducted by credible,
third-party compensation firms that collect and verify data directly from executives or
professionals within HR or finance departments of participating organizations.
Most compensation professionals consider it a bad practice to use surveys and resources
with compensation data self-reported from individual employees. The validity of employee-provided
data is questionable because both the job match (including leveling) and pay data have not been
verified by the employer.
Over 70 percent of companies avoid using compensation surveys and resources with data collected
from individual employees. Another 15 percent only use surveys with employee-provided data when
no other resources exist (Figure 2).
Three out of four companies use spreadsheets (e.g., Excel) for analyzing and managing compensation
survey data. Nearly one-third use compensation market pricing software or Web-based tools from
a third-party compensation firm or software vendor (Figure 3).
As companies increase in size, they are less likely to rely on spreadsheets and more likely
to use software applications or Web-based tools to analyze and manage compensation survey market data.
In addition to the figures above, we provide a more comprehensive PDF report
with additional figures, data tables, and analysis. Topics covered include sources of market
data used for compensation analysis, use of employee-provided compensation data, number of
compensation surveys used, use of compensation market pricing tools and technology,
compensation market position philosophy, and preferred statistical calculations and metrics.
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Free to participants in 2011 Culpepper Compensation Market Pricing Practices Survey
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$295 USD for non-participants (Order Form)
Data Source: 2011 Culpepper Compensation Market Pricing Practices Survey of 226 participating organizations.
Survey Dates:
June 22, 2011 through September 23, 2011
Participants by Sector:
Technology 41.6%, Life Sciences 7.2%, Healthcare 8.1%, Manufacturing 12.7%,
Financial Services & Insurance 9.0%, Business Services 4.5%, Other 16.9%
Participants by Number of Employees:
Up to 100: 10.0%, 101 to 500: 20.8%, 501 to 2,500: 28.5%, 2,501 to 10,000: 24.0%, Over 10,000: 16.7%
Participants by Ownership/Corporate Status:
Public 41.2%, Private 41.2%, Non-Profit 13.1%, Other 4.5%
Country Location of Participating Organizations:
United States 89.6%, Canada 3.6%, Other 6.8%
Copying. If you want to copy portions of this report into your own publication,
please cite the source by including the following:
“Source: 2011 Culpepper Compensation Market Pricing Practices Survey, October 2011, www.culpepper.com.”
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