Determining competitive pay levels has become much easier as more compensation surveys have been developed. Thousands of surveys are conducted each year. Some of these are good, some bad and some very misleading.

Poorly conducted surveys can be misleading. For that reason, it is important to use surveys that are carefully processed:

• We prefer not to use "self reporting" surveys (like you often see in magazines) where employees submit data about their own pay. Better surveys are normally conducted through human resource departments.
• Surveys that show data by participant run the risk of violating anti-trust rules. Recent court cases have created embarrassment and significant legal fees for participants in surveys that failed to pay attention to some straight-forward legal requirements. (Contact ECI for information about relevant legal cases.) Based on legal precedents, surveys should:
  • not ask questions about future compensation plans
  • present data in aggregate form only
  • not report data in a format that would allow individual company data to be identified
  • be conducted by a neutral third party, not by a firm that will use the data (this creates concerns even about casual sharing of information over the telephone).
• Good surveys will normally include data on incentives, work practices and other compensation elements, not just base pay.
• The most critical criteria for a good survey is that the data should be carefully reviewed by a knowledgeable analyst to assure that each of the survey matches is reasonable and accurate (avoid GIGO - garbage in - garbage out)
• Good surveys provide meaningful data subsets - such as location data for lower level jobs that tend to be hired locally and industry and size subsets for professional and managerial positions.

It is important to remember when using surveys that the data is only a sampling of the entire relevant universe and should be used cautiously. In addition, remember that the data is historical and should be "aged" to the time period when you will be using the data.

To learn more about surveys conducted by ECI, see our "Compensation Surveys" section.

To obtain an outline of key survey planning issues, see our "Articles & Speeches" section.