Using published surveys - some tips
We are hitting the time of year (written in Autumn) when many of the annual salary
surveys come out and there will be the usual newspaper headlines - Managers' pay
races ahead, Inflation-busting rises for ______ (fill in the blank yourself), Public
Sector Workers better off/worse off, etc. Invariably, you will wonder whether you
have really got your benchmarking right. Even if you do not your managers will, especially
if the headlines appear to show that everyone else got bigger rises. If you already
have a sophisticated process for monitoring your pay market, have low staff turnover
and can recruit easily, just ignore the headlines - otherwise here are a few tips
on how to make the best use of the published surveys.
Lots of choice
Incomes Data Services list of salary surveys stretches to 118 UK-wide surveys, 45
local ones and 23 surveys of benefits. They include general management surveys, industry
or sector specific surveys and specialist ones such as engineering. Invariably they
are available for sale (about one-third are only sold to participants). So how do
you choose without spending your whole budget on buying them all? Some professional
or business libraries buy some of the better-known ones and there may be one such
near you. You may know colleagues in other organisations who already subscribe and
would let you read theirs. Most respectable surveys will provide you with information
about the sample size. coverage and rank/job definitions before you buy. Most are
reported in summary in publications such as IDS.
Interpretation is everything
Surveys can easily give a false impression of precision. Although good report-writing
practice is to round-off values to match the level off precision, many surveys give
results to the nearest pound. Their coverage will also look impressive at first sight.
As can the numerous cross-tabulations. The first step is to analyse the coverage
and think about how well you compare. Sector or function-specific surveys might seem
to offer the greatest accuracy but that is not always the case. Some sectors are
less coherent than others. Charities, for example, come in a wide range of sizes
but many are relatively small in terms of employee numbers so that a survey of, say,
100 charities needs to be interpreted with great care. In any sector, or specialism,
where employee numbers are generally small staff turnover can be high as people must
move around to structure their careers. This can result in some survey tabulations
showing a downward movement between one year's survey and the next. Every organisation
has paid an increase but medians have gone down. This is the reverse of what happens
in most surveys where medians and averages rise between surveys.
Quite often the summary report at the front of a survey will show an annual earnings
movement (difference between medians) that is different (usually higher) than the
average across-the-board increase reported by the participants.. Before you conclude
that you need to award the higher figure, make sure you know corresponding values
for your workforce.
Surveys of technical specialisms can be very useful at more junior levels but loose
their focus at senior ones where technical roles merge with management ones and numbers
thin out. There is a number of surveys of specialisms that are complied on a self-selection
basis; typically of members of a professional body; these can also be suspect.
What to look for
Among the most reliable are the well-known and long-standing management surveys.
Even here you need to examine the coverage and understand the match with your own
organisation. Most use a ranking system (Rank 1 = Chief Executive, etc.) accompanied
by one-paragraph job descriptions. Work out which ranks your structure lines up with
and do not assume that you have roles in every rank or that your most senior jobs
are rank 1. Having sorted that out you need to understand the way the survey tabulates
its findings and decide where you fit. The fact that the average rank 3 manager is
paid £XX,000 is not very helpful if the survey covers the whole country, many sectors
and company sizes. Most surveys tabulate results by company turnover in ever widening
bands (<£5m, £5m to £15m, £15m to £50m etc.). If your organisation is a middle-of-the-road
commercial business turnover is a very good indicator but if yours is one where much
of the money that passes through your hands is not directly due to your day-to-day
efforts (government funding, for example) the tabulations by employee numbers might
give a more accurate picture. Most surveys tabulate median and upper and lower quartile
figures. Some also give deciles.
If, as many organisations do, you set a pay aspiration (we will pay upper quartile
salaries) can you just take the findings at face value? Not necessarily. A table
giving findings for, say, a rank 3 manager among companies with turnovers between
£50m and £150m combines salaries that reflect several factors: the nature and size
of organisations covered; the diversity of the job responsibilities within that rank
and the range of experience and skill of job holders. These factors matter most when
trying to price individual jobs. Most confusing of all is to compare findings from
different surveys, especially the ones based on data extracted from annual reports
which can often produce much higher values.
Overall
I have described various pitfalls in using surveys but that is not to imply they
are not useful. The danger, as I said earlier, is that they appear to carry a level
of authority and accuracy that can lead you to adopt their conclusions blindly. Your
starting point, especially If you are new to using this sort of data, is first to
take a reality check. Form a view of where you think you stand. Is staff turnover
a problem? How successful are you at recruiting? What other data do you have - local
surveys, informal discussions with other employer, relevant advertised salaries?
What are the characteristics of your workforce? What motivates them to stay with
you? How have your annual increases compared to those you compete with? Then you
will be better prepared to interrogate the surveys intelligently. Find the ones that
seem to best match your situation and then use them, on an annual basis, to monitor
movement as much as to set absolute values.
Frank Hobson
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