Internet Pay Data: Beyond the Question of Transparency

The democratization of pay information has happened.  Internet pay data is here to stay.  That's a fact.  It is also a fact that this presents a challenge to those of us in HR and compensation positions, as we respond to the questions, demands and - yes - complaints of information-empowered employees.

Several of my favorite bloggers in the HR space (including John Hollon at the Business of Management and Kris Dunn at the HR Capitalist) have posted recently on the topic of Internet pay transparency, particularly in the wake of yet another entry (Glassdoor.com) to the growing list of Internet pay sites.  After a bit of reflection, and coming to the party late as usual, I thought I'd toss in my two cents.

Having been both an employee and a job seeker, I can't deny the value of having access to pay information in order to guide one's employment choices and decisions.  But, and this is a big but, it is important for all parties to recognize that there is a difference between the kind of pay information that employees can access for free on the Internet and the kind of pay information that most employers bank on in reviewing and setting their pay programs and practices.  Most of the survey data that is used and relied upon by employers reveals - for example - not only the timing and method of data collection, but also the number of companies and employees represented in the data for each position and the organizations who submitted data (along with their demographics in terms of size, location, industry, etc.).  Most of the survey data used and relied upon by employers typically relies on data collection via an independent and valid source (like a Human Resources department) - not self reporting by the job incumbents themselves.  And, yes, most of the survey data used and relied upon by employers typically costs money.  Sometimes a lot of money. 

With employee compensation being, for most organizations, a major cost of doing business, it behooves them to make the investments (read survey purchases) necessary to ensure that pay decisions are made based on a valid, accurate and appropriate set of information.  Further, it is the employer's right and responsibility to determine what data it will use and how it will set its practices relative to that data.  Of course, the employer bears the risks associated with any poor decisions or choices in this regard (e.g., paying above or below market norms without a sound rationale for doing so).

And so the parties in this employment relationship find themselves in the situation of relying on two different sets of data, which might (and, in my experience, often does) lead to different conclusions about pay.  What to do?  Really, I think you are best served dealing with it head on and having an honest, adult discussion with the employee about how - and why - their information may be different than that which the company uses.

Transparency is only one part of the challenge presented by the growing abundance of internet pay data; it also involves understanding and reconciling differences in the nature and precision of data typically used by employees versus employers. 

Comments

[almostgotit.com]

I appreciate, as always, your appreciation of nuance and your preference for straight-forwardness -- not a common combo! Another thing I like about your blog (always have) is the balance you seek between the interests of the employer and the employee. Because, of course, in the end they are THE SAME THING!

For the last few days, I have been writing about the more typical *lack* of this balance that I have been seeing recently. It seems that the current job market has made everyone focus on the competition between job applicants, instead of the increasing economic pressure on businesses that ought to put more of this focus back on the shoulders of those who are hiring (and retaining) employees. I'd appreciate your input. HINT! :)

[Ann Bares]

Almost,

Thanks - always - for your comment and thoughts.

It's true that I do strive to balance the interests of employees and employers in my posts (thanks for noticing!), for the good reason that you point out - that their well-being is ultimately connected. It's also true, though, that my advice tends to be aimed at employers (read HR folks) and their concerns, because these are the people I serve on a daily basis and this is the angle from which I think I have the most value to offer. Other bloggers, like our mutual friend the Career Encourager, are better able and more qualified to aim their advice directly at employees (current and would be), while still performing their own "balancing of interests" act.

I say this because I think it lays the foundation for my input and response to your thoughts.

I have read what you've been writing on the topic of balance (because I also like your blog!). I think you're right, that there is an imbalance in the job market, and in the things that those who opine on the job market are saying to us. I also think, however, that this imbalance is a natural - though not necessarily a happy - product of our being in a buyer's market talent-wise. When there is a job shortage, and the sellers of talent (employees/job seekers) outnumber the buyers of talent (employers), the buyers are at a natural advantage and there is a heightened sense of competition among (and pressure on) the sellers. Same thing is happening in the housing market right now. At its essence, this is basic economics, a matter of supply and demand.

There's good news too, though. The pendulum swings both ways, I've seen this first-hand, and I've now watched and worked through a number of cycles. In a seller's market for talent, it is the employers (the buyers) who are under pressure to find and keep staff amid the heightened competition for good people. Then it is the "war for talent" and the "battle of the signing bonuses".

And so what goes around comes around. We can love or hate, agree or disagree with "the market" and the effects of changes in supply and demand, but I think that we are smart to take them into account and that we ignore them at our own peril. That is why, for example, we are having a discussion at my house, with my son, about doing the extra work and time to take on a computer science minor to accompany his major in communications, in the hope that the additional effort and credentials will give him an edge in what (at least today) is a tough job market.

Those are my thoughts. Reaction?

[almostgotit]

Oh, my, I'm so flattered. Thanks so very much for this long and thoughtful response, Ann! I totally agree with you that we ignore realities (and market forces) at our peril. I don't expect to win this one (call me the mouse that roared, or something); I just mean to point out that even though employers are in the driver seat right now, a lot of them also are doing some pretty dumb driving. And quite exactly? Because they CAN!

[Ann Bares]

The mouse that roared ... I love it!

Your point is right on. Employers who develop a reputation for treating employees - and prospective employees - poorly will pay a price for their short-sightedness when the tables turn. And the tables will turn. This is an excellent opportunity for the long-sighted employer to hone its employment brand, simply by treating people respectfully and fairly, so that it is in a strong position when the next seller's market rolls in.

Thanks for the conversation!