How Often Should You Analyze Market Pay Data?

This is a question we get asked frequently. Typically, our recommendation on best practice is to formally analyze market data at least every three years, using multiple market sources. There can be many reasons why you would want to look at data more frequently for reasons such as high turnover and an increase in market demand for certain jobs. If you have reliable survey resources, it can also be a good idea to at least do a quick pulse check annually for most jobs. 

In addition to looking at data for specific jobs, we also recommend aging salary ranges annually to keep up with the competitive market based on trend data. Typically it’s a good idea to age your structure at least slightly less than your increase percentages to ensure employees are able to move up within the salary range. A frequent problematic practice that we see is only reanalyzing wages when recruiting which can encourage turnover if your employees feel the need to look elsewhere for that next bump in salary. It can do your organization a great disservice if you have the viewpoint that just because employees aren’t leaving, they are happy with their compensation and you are paying them fairly and competitively. If employees are looking elsewhere, they may soon realize that they can be compensated more somewhere else. This can be especially disheartening if they have been with the organization for a long period of time with little increases and no market adjustments.

Needing to rehire can also create issues if the market is paying much more than your current pay practices which may cause pay equity and internal pay compression issues. We recommend keeping your data updated and keeping a pulse on the marketplace to avoid these issues. 

Our Compensation Team specializes in market assessments and has a large library of resources to ensure you are capturing many areas of the marketplace. We are also currently collecting data for our 2021 Regional Pay Survey through March 19 with results published in May, which is a wonderful resource and free to our members with participation. Let us help you with the resources necessary to ensure you are paying competitively to reward and retain your key employees.