Determining a fair compensation level for employees is critical for every business. If a business wants to become and remain competitive within its industry, it should perform regular compensation surveys.
If your business underpays its employees, they may look elsewhere for a higher salary. On the other hand, if your business overpays in terms of salary and benefits, your company's' profitability may suffer. Therefore, to best determine fair compensation for employees, many companies use market data obtained from a compensation survey to place a price tag range on the jobs they offer.
A compensation survey is a survey tool that is a detailed collection of the average salaries and benefits paid to employees in your region and industry, with respect to a given job.
Compensation surveys are often referred to as salary surveys. However, there is a key difference between the two. While both compensation and salary surveys obtain data on wages, a compensation survey goes a step further and includes benefits information.
Companies can use detailed and specific compensation surveys using online survey software to benchmark their jobs to that of the prevailing compensation levels in their specific industry and location. If data comes back showing significant deviation from industry averages, your company can adjust compensation packages upward or downward based on the results of the compensation surveys.
Optimally, compensation surveys are conducted twice a year -- or annually at a minimum. One of the benefits of conducting a compensation survey more frequently, such as every six months, is that you will also have your pulse on the job market; you'll know first hand where salary and compensation levels stand, what new employees are looking for, and what may cause your existing employees to jump ship.
To obtain respondents for your compensation survey, most human resources managers have success in generating a list from industry groups, businesses, and temp agencies within their industry. Local chapters of human resource associations and organizations are exceptionally good places to start.
Standard compensation surveys are broad and cover main industries and common jobs. On the other hand, custom compensation surveys can be quite specific. In other words, they can be very narrow providing data on a specific job, in a specific area, and in a specific region of the country.
While some companies conduct their own in-house surveys, most utilize survey software to collect data and perform an analysis of the data. Regardless of the method, as part of preparing for the survey, human resource staff should compile information on the job description they want data on, included education and experience information. You'll want to include the average length of service employees are in a position and the frequency and amount of bonuses paid on average for each position. Obtaining a minimum, midpoint, and maximum salary figure is standard fare when gathering data using compensation survey software.
While there are many aspects as to what makes an employee happy on the job, decreases employee turnover, and increases employee retention, having a fair total compensation package is almost always near the top of the list.