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HR Magazine, May 2001: Salaries in Site
 

By Alison Stein Wellner  5/1/2001
 
HR Magazine, May 2001 Vol. 46, No. 5

Be prepared to deal with employees who know what they're worth.

Of all the revolutions sparked by the Internet, the democratization of information arguably has had the greatest effect on today’s workplace. That’s especially true for employees when it comes to their pay. A quick foray into free online salary surveys gives employees at least some idea of how their salary compares to others across the nation—or across the street.

“The bright side is that there’s more salary data than I’ve ever seen available for free online,” says Deborah Keary, SPHR, director of the Information Center at the Society for Human Resource Management (SHRM) in Alexandria, Va. And the information also may be useful to HR practitioners as they direct compensation strategy.

But it definitely puts HR on the spot. Consider a research manager, who asked not to be identified, who has worked for a market research firm in upstate New York for three years and regularly puts in 80-hour weeks at work. She surfed on Salary.com and was horrified to discover that her salary was $10,000 lower than the lowest number listed as a median range.

“What I wanted to do was take the information immediately to the president of the company and say, ‘What’s wrong with you?’” she recalls. “Instead, I did take the information to my boss, and I handed her the numbers and said, ‘Tell me why I’m not anywhere near those numbers.’”

Although she ultimately got a raise that put her close to the bottom of the median range reported by Salary.com, she’s now actively looking for a new job. “It made me distrust everything because I had gotten promotions and raises,” she says. “I was working under the assumption that they were trying to be fair to me. But what that information from Salary.com suggests is this: If that information was so readily available to me, it must have been readily available to HR and management. And they must have looked at those numbers and blatantly said, ‘Oh well, too bad for her. As long as she’s not paying attention, let’s save ourselves $15,000 this year.’”

Obviously, this employee was having other problems with her employer, but finding out that she was underpaid sent her on the prowl for a new position. That’s common, says Tracy Herand, senior compensation analyst at Candle Corp., a technology firm in El Segundo, Calif. “Salary sites are a catalyst that pushes employees to act,” she says. “What they find is often the straw that broke the camel’s back.”

On the other hand, sometimes otherwise content employees will bring in their salary data just to see what they can get as a bargaining ploy, says Susan Barbee, HR director at Tangram Enterprise Solutions Inc., a 110-employee software firm in Cary, N.C. Confrontations such as these occur in her company about four or five times a year, and they seem to follow a pattern.

For example, her director of product development recently told her that one of his employees had looked up salary information on the web—and then stared at his paycheck. “The person walked in, said, ‘This is what it says I should make on the web. What are you going to do about it?’ and walked out,” she recalls.

Barbee, who does her benchmarking with the aid of many private surveys, including those from salary research firms, was confident that the salary level was adequate. So, Barbee and the employee’s manager explained to the employee exactly what skills he would need to acquire to qualify for a raise. In this case, the employee seemed satisfied—and is still on the job. In fact, Barbee says she’s never adjusted an individual’s salary based on a web-fueled complaint.

Evaluate the Salary Site

What makes these confrontations so difficult for HR practitioners is that while employees believe the information, it’s difficult for HR professionals to know which sources of free online salary information, if any, they should trust.

Proper evaluation of online salary information is complicated because there are so many salary sites. A recent Google.com search under “salary comparison sites” yielded more than 72,000 hits. And because each site uses different methodology, HR professionals have to evaluate each one separately when confronted with an employee waving a printed web page.

You’re most likely to see data from Salary.com, arguably the most popular provider of salary comparisons. The site averages 13.4 million page views in a six-month period and hosts 1.7 million unique visitors each month. In addition to its own site, Salary.com provides its data to 130 other sites, including portals such as AOL and Yahoo!, and media sites such as Business Week and the New York Times.

Salary.com provides detailed geographic information and matching job descriptions for 1,200 positions. The primary tool used by Salary.com is the Salary Wizard, which allows users to enter a job title and ZIP code, and receive a median salary number, as well as a range from 25 percent of the median through 75 percent of the median.

The Salary Wizard is based on Salary.com’s analysis of several different data sources, which the company’s team of compensation specialists aggregates into a database and then uses to power the Wizard.

Exactly which data make it into the database? Bill Coleman, vice president of compensation, won’t say. “We use whatever we are comfortable with as being a reliable source, primarily what we can purchase from reputable national or regional HR consulting firms,” Coleman says. “We cannot name the specific names that we use out of professional courtesy to them. We don’t have their permission.” Many of the data providers used by Salary.com also sell their data. And knowledge that at least some of it is available for free through Salary.com might dampen sales.

Currently, the Salary Wizard is based on about a dozen separate surveys, which helps to eliminate any statistically anomalous volatility in any one survey, says Coleman. After data are aggregated, the team at Salary.com collects information about how each U.S. city relates to the national average in salaries and makes geographic calculations based on that information. From the city level, the team is able to extrapolate down to the ZIP code level, adjusting salaries downward with distance from a major metropolitan area because cost of living goes down the farther you are from a city. Salary.com verifies its numbers against salaries posted in help-wanted ads on web sites, and the team interviews some companies.

Coleman was willing to say which data categories are excluded from the database for calculations. Salary.com doesn’t use magazine-based surveys or data gathered by recruiters. “Recruiter data is considered by some HR people to be data from the devil,” he says. Nor does it use data gathered on web sites directly from employees. Also, Salary.com only uses data from the Bureau of Labor Statistics as a validation tool because BLS statistics are too old to make it into the Wizard, which is updated monthly.

Analyze the Data

The Wall Street Journal’s salary offering is quite different. CareerJournal.com is for those who prefer data separate and “not lumped together in one big pot,” says Tony Lee, editor in chief and general manager of the site.

The predecessor to CareerJournal.com, National Business Employment Weekly, had in-depth salary statistics on one employer, and one function was featured. Now that’s all been moved online, with additional tables. In about 50 categories, there are two to 10 articles about compensation in a field and four to 10 salary tables, depending on the industry. You then can judge the credibility of the data provided.

The site is updated every week, although not all data are updated. Under “journalism” for example, CareerJournal.com offers two articles about the field and four surveys. One survey from 1999, was conducted by the Columbia Journalism Review. Another is a 2000 study by the Radio-Television News Directors Association in Washington, D.C. Geographic information is available for surveys only where it was collected by the researcher, and there are no links to the data collector’s web site to investigate methodology.

The entity that collects the most definitive data about U.S. salaries also has a web site aimed more toward employees than HR practitioners. America’s Career InfoNet (www.acinet.org), a service of the federal government, provides access to BLS wage data. The site allows you to search by position and by state and provides median hourly and annual income, as well as mid-range hourly and annual figures.

ACINet’s data are based primarily on the BLS Occupational Employment Statistics Survey and are supplemented by data gathered by individual states. The BLS’s survey is an annual mail-based study that surveys a sample of approximately 400,000 organizations each year and, over three years, contacts approximately 1.2 million organizations. While you can make an estimate from a single year of data, the survey is designed to support estimates down to different levels of geography, occupational detail and industry when analysis is based on the full sample.

One weakness of this site is that the information is old. The most recent data available at a detailed level are from 1998. Also, job descriptions are broad and, to get technical information on the survey, you have to surf back and forth between ACINet and the BLS survey site, which is not always easy to navigate.

Some sites charge for some of their data, such as WageWeb at www. wageweb.com. WageWeb provides national data free to all who surf there, but to get down to details, you will have to join. The price is $169 a year for organizations and $249 a year for consultants. The site provides benchmark information on more than 170 positions and claims a database of 1,400 organizations. Positions are sorted by eight categories: HR, administrative, finance, information management, engineering, health care, sales/marketing and manufacturing.

The free information is detailed enough to make evaluation of the data easy. For each position, you learn the number of companies responding for a given position, the number of employees in a position, mean average minimum salary, mean average salary, mean average maximum salary and average bonus paid, if any. The site also provides cursory job descriptions. Dated numbers are a weakness of this site as well; in February 2001, data posted were from July 1, 2000.

There also are specialty sites that zero in on industry or field. DataMasters at www.datamasters.com, specializes in the computer industry and provides salary information on the median low, median high and regional median for about 30 different job titles under the headings of “Management Level, Professional Staff.” These are further broken into regions of the country: Northeast, Midwest, Southeast and West Coast. The FAQs about the survey say Dowden & Co., a compensation research firm based in Drexel Hill, Pa., conducted the survey in 2001.

The site says data are based on “900 employers of information systems professionals, including corporations of all sizes, in every industry group, from every U.S. region.” It includes a paragraph of job descriptions for each position listed. The downside here is that the data are broken out only to the regional level.

One Tool Among Many

Of course, when salary data are free, there’s usually some kind of trade-off, points out SHRM’s Keary. “You get what you pay for.” Still, if you evaluate a salary survey and find it acceptable, there’s nothing wrong with bringing it into your planning mix as one data point among many, she adds.

In the age of information, the more data you can get about salaries, the better armed you will be when the next angry employees demand to know why they’re not earning as much as the Internet says they should.

Alison Stein Wellner is a freelance business writer based in Newark, Del.

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