The High Cost of Free Surveys

Top HR Consultant, To Executive Compensation Consultant, Online Surveys

Joey was not unhappy with his salary but admitted to occasional internet grazing in order to “pay shop” similar jobs to his own. This is how he discovered “The Mining Pay Survey”. The site invited miners to enter their pay alongside job descriptions that best matched their own and then aggregated results and made them available to employers. Joey was aware that his boss (a man not known to pay for information he could get for free) researched the site at pay review time.

Joey’s job appeared split between two positions on the site and without much thought, he picked one to which he added his salary plus $10k believing that it would increase the average that his boss would refer to when he compared Joey’s pay, concluding that he was below the market.

Joey has affected the validity of the “market rate” promoted by the site in two ways; firstly, he did not his job correctly meaning pay will not match responsibilities and second, he overstated his pay. Let’s assume that of the 20 people like Joey who submitted data, 10 did the same and overstated their pay by $10k. The “market rate” would be inflated by $5,000.

There are 100 employees working on site with Joey, some paid more, others less, but let’s assume mismatching and overstated data occur at the same rate resulting in market rates being inflated by $3,000 p.a. Extrapolated to 100 people that would mean $300K p.a. (assuming all are paid at the “market”). With bonus and other salary driven additions of course that would mean almost $1m of extra cost over three years.

While market data is by no means the single consideration it is an important reference point in compensation decision making and maintenance of market-alignment. Factors beyond job content such as company size, location, geographical footprint are also important considerations that will influence results.

We have made some sweeping assumptions here but you get the point. Surveys that rely on self-completion are directionally helpful but inappropriate for setting competitive pay. There are no humans matching Joey’s job to the survey’s capsule description and no one checking that his salary aligns with payroll. Algorithms make decisions. Even if our estimate is 50% out, substantial shareholder value is at risk.

By contrast a comprehensive comparison of pay every two years for say 20 jobs, taking into account all elements of compensation typically costs around $20,000 or substantially more depending on the consulting house! Which provides the better value for money and least risk; $300K or $10K?

A comprehensive pay survey represents a fraction of the cost of an excessive payroll. The moral of this story is that free surveys are not without cost. Professional help and comparison of clean data against legitimate competitors will provide a more robust pay structure and competitive cost base.

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