Company's pay data drives hiring, compensation decisions


This article originally appeared in The Kansas City Star.

An Olathe business specializes in providing data crucial to companies’ ability to find and keep talented workers.
Compdata Surveys annually publishes the 23-volume “Compensation Data” study, which provides salary, pay practice and benefit information for 539 job titles in 39 states. The company also produces separate, detailed studies on benefits and executive compensation.
“Compensation Data,” the top seller, breaks pay information out into metro and rural areas. That way, employers can make local or regional comparisons when setting wages instead of going by a statewide average.
Theresa Worman, vice president of business development, said companies primarily use the studies to determine pay rates and pay raise budgets.
“Businesses use this to be competitive,” she said. “A lot of times they have to answer the question, ‘How high is up?’ They’ve got to have an idea what the competition is doing.”
In addition to salary, today’s employees are also savvy about health and other benefits, Worman said. In the last few years, Compdata has begun providing information on more categories of benefits. It has also added data on recruitment practices.
“We have an educated work force,” she said. “Companies have to be quick on their toes to make changes and to make their compensation program a successful part of their business plan and culture.”
Compdata’s research is based on survey results from about 5,000 companies. Businesses that want to purchase the study get an incentive to share their pay information with Compdata. Companies that agree to participate in the survey get a discount. Such incentives are necessary to ensure participation in the studies, Worman said. Plus, human resource professionals know they must participate to get good data.
“Unfortunately most businesses don’t have a lot of time for the good of mankind,” she said. “Everything about the pricing structure is designed to encourage participation in the survey.”
There’s nothing unorthodox about that approach, said Don Linder, compensation practice leader for WorldatWork, a Scottsdale, Ariz.,-based human resources association.
“That’s one technique companies use to get participation,” he said. “In order to get good data, there have to be incentives like that.”
The survey results are used by companies big and small, Worman said, from Fortune 500 firms to those not large enough to have a human resources department.
Compdata’s research differs from salary surveys performed by trade associations, she said. While those studies measure jobs within a specific industry, they generally don’t include pay data on jobs that overlap with other sectors. A bakery may pay accountants well by baking industry standards, but how does its pay compare to other industries? “Compensation Data” answers that question.
Worman said that within the past two decades, companies conducted pay surveys amongst themselves. But this trend has faded because cutthroat competition and federal antitrust rulings have combined to push businesses to third-party companies such as Compdata.
“Very few if anybody does that anymore, which is very good for these salary houses,” Linder said. “It isn’t worth the risk.”
Although not its primary business, Compdata also provides customized surveys for trade groups, such as the Missouri and Kansas Hospital associations.
“You’ve got to be very competitive in what I call these very high demand sectors,” said Michael R. Dunaway, senior vice president for field operations for the Kansas City Metropolitan Healthcare Council, a local office of those hospital associations. “Health care is one of those that is really hot right now.
“The health care survey provides opportunities for all hospitals to do a couple of benchmarks throughout the year.”
In addition to using the industry-specific survey, hospitals use “Compensation Data” to compare wages for jobs in which they compete against other industries. Worman said hospitals in Kansas City and St. Louis face keen competition from casinos for hourly workers in jobs such as maintenance, food service and housekeeping.
Suzanne Kimmich, a senior compensation analyst for Tenet Healthcare in St. Louis, said the Compdata health care survey provides information not available elsewhere.
“We can run a query and find out what the average rate is for a nurse with seven years of experience,” she said.
Dunaway and Kimmich said multiple surveys – not just Compdata resources – are used to try to get the most accurate pay data.
“We are always recommending you get two our three sources,” Linder said. “There are literally thousands of different surveys and hundreds of survey providers. Quality is always the issue. You’ve got to be very careful with the quality of the data you are getting.”
Linder said companies’ use survey data to put wheels on their compensation strategy. After deciding where they want to land on the pay ladder (for example, the fiftieth percentile), businesses use survey data to affix hard numbers to jobs. A firm may set its salary range lower or higher on the percentage scale, depending on benefits it offers and the expectations it places on employees.
“The highest and best use of the data is to set market pricing and to execute a company compensation strategy,” he said. “It’s all about paying what you need to pay.”