Money matters: conduct salary research and set competitive pay

People work in exchange for money. It’s the very premise of having a job in the first place. But unfortunately, according to Gartner, only 32% of employees believe they’re paid fairly for the work they do.

That’s a major (and important) obstacle to overcome. Fortunately, thorough and accurate salary research can help. 

Why is salary research important?

Here’s the simplest answer: salary research lays the foundation for fair and competitive employee pay. Appropriate compensation has a major impact on your organization’s ability to:

Attract top talent

According to Gallup, 64% of job seekers say pay and benefits are critical factors when determining whether to accept a new job. Competitive wages make your organization more attractive to job seekers — particularly top talent that has high value in the market.

Retain your employees

Pay is also crucial for keeping employees with your organization. Among workers who quit their jobs in 2021, pay was the top-cited factor for why they left. In more recent research, 67% of survey respondents said pay is the most important thing they consider when deciding whether to stick with a job.

Maintaining a positive culture

“Putting effort into salary research, benchmarking, and using findings to make compensation decisions can impact workplace culture,” explains Aida Gueye, an HR professional. Pay is a key piece in helping workers feel adequately supported, recognized, and appreciated. Pizza parties and pats on the back don’t go far if employees don’t perceive that their pay matches their value.

Staying on top of rapid changes

“Salaries change for many reasons, but mostly because jobs change and because market forces influence pay,” explains Marcia Dickerson, PhD, an independent consultant at Dickerson Management and Career Consulting. Broader forces like the labor market and the economy are ever-changing — and employee pay needs to evolve accordingly.

Ensuring pay equity

Aida says it’s also important for organizations to “conduct regular salary reviews to help maintain internal equity with existing employees.” Despite ongoing conversations about the gender pay gap, data from Pew Research Center shows there hasn’t been much meaningful change in the past two decades. And according to the Department of Labor, women working full-time are still paid 84% of what men are paid.

Put simply, thorough salary research helps companies prioritize and ensure fair and equitable pay. And that leads to plenty of other benefits related to employee engagement, satisfaction, and more.

Four strategies for better salary research

Pay isn’t stagnant, which means salary research needs to happen regularly and frequently. Plan to review market data — and compare those findings to your employees’ salaries — annually. 

When you do, here are four best practices to complete the most thorough and helpful salary research for your organization.

1. Start with trade or industry data

“I usually recommend looking at any trade or industry data first, as those are most likely to conform to the types of jobs your organization has,” Marcia explains.

Check to see if any industry associations or organizations publish salary data. Additionally, larger outlets offer the option to explore or purchase salary information by industry, including:

• PayScale
• Salary.com
• SHRM Compensation Data Center
• U.S. Bureau of Labor Statistics

Your goal should be to gather as much data as possible and get an idea of the bottom, top, and average salary for a specific position. Don’t just look at one resource — review multiple sources to compare and get the whole picture.

2. Peruse other surveys and resources

In the interest of getting as much information as possible, Marcia says it can also be worthwhile to “look at posted pay ranges on competitors’ or similar organizations’ websites or online job boards.” While she notes that the ranges are often broad, it gives you greater context about what compensation looks like for specific positions.

There are plenty of other tools to help you go beyond vague surveys or ranges and get specific. With Workable’s Salary Estimator, you can access millions of salary data points tailored to your specific job requirements — instantly and directly within your Workable ATS.

3. Tap your professional network

There’s a lot to be said for going beyond spreadsheets and connecting with other professionals. “Once you identify the roles you are trying to benchmark, one of the easiest ways to get started is through your professional network by engaging with fellow HR professionals within your industry,” Aida explains.

Through candid conversations, you can learn more about other organizations’ pay philosophies and the typical compensation packages for different types of positions. While this information might seem more anecdotal than hard data, it’s a valuable piece to get a complete grasp on the market for specific roles.

4. Monitor your other metrics

Your employee metrics — even the ones that don’t directly relate to pay — are another area to keep a close eye on. 

What’s your retention rate? What sort of feedback are employees giving in engagement surveys or exit interviews? Are you struggling to convert candidates to hires? All of that data can clue you in on whether your compensation is competitive or you need to make some strategic changes.

Beyond bucks: thinking big about compensation

It’s tempting to get fixated on the digits when conducting salary research. You take a quick glance at the average salary and then adjust accordingly. However, experts warn there are a few other important factors to keep in mind when evaluating and revising your pay, including:

• Location: With more teams working remotely or in hybrid arrangements, some companies opt for location-based pay models that adjust an employee’s pay based on where they live. When some areas come with much higher taxes or living costs than others, these adjustments can help with equity — even if the numbers on paper aren’t the same.

• Cost of living: Despite the fact that inflation has slowed, life is still more expensive than it used to be (and, related to the above, that’s especially true in larger cities). That’s why Marcia warns that cost of living needs to factor into the equation, particularly to confirm that your salaries have kept pace with rising costs “You can use a cost of living calculator to make better decisions,” she adds.

• Total compensation: “The most important thing that you can do when you’re looking for pay data is to consider total compensation,” Marcia explains. That includes not just the base salary, but any variable pay like profit sharing and bonuses as well as other benefits. “Some companies offer a lower base salary, but incredible benefits or large annual profit-sharing checks,” she adds.

• Additional benefits: On the topic of benefits, those carry a lot of weight with employees. In fact, workers say they’re willing to take a 20% pay cut in exchange for a better quality of life and work-life balance recently outranked pay as the top factor for people who leave their jobs. Marcia also says training and development or opportunities for advancement are another big aspect that employees consider. While those benefits aren’t a replacement for fair or adequate pay, they can offset a salary that’s not at the top of the range.

Turn salary information into action

Salary research on its own is an exercise in information gathering. But to see a meaningful difference within your organization, you need to act on the data you collect.

That means making necessary adjustments to employee pay. However, it also involves clear communication. Be prepared to share the results of your research with employees and provide visibility into your decision-making processes.

Employees increasingly want pay transparency — not just about the numbers themselves, but also about how you set ranges and approach pay-based decisions. That peek behind the curtain reduces disparities and helps them feel in-the-know about their current and future earnings.