Market Analysis on the Moving Walkway

Does this survey data really reflect what's happening on the ground today, given all the turmoil in the economy?

The question was posed by an HR colleague and client as we poured over the findings of a market pay analysis based on a host of 2008 survey sources.  I'm guessing it's a question being asked frequently of HR and compensation professionals by senior management these days, as market studies are discussed and dissected.

The answer is complicated.

Part 1: Although a number of prominent survey providers are offering - or working toward - a more "evergreen" model of compensation survey, the lion's share of the sources upon which most of us still rely follow a more traditional model.  Data is collected from participating companies, there is a period (typically several months) during which the data is checked, analyzed and prepared for reporting, and then the survey results are published and released.  By the time you get the brand new survey report into your hot little hands, the data in it is already several months old.  And by the time next year's replacement arrives, the data will be over a year in age.

This is an unfortunate reality and one we must deal with as best we are able - at least until the whole compensation data thing is revolutionized, which I have no doubt it will be in the foreseeable future.  In the meantime, we will certainly "age" the data appropriately as we are using it throughout the year, though this gives us only an approximate imitation of what is actually happening out in the market.  Out there, job values are zigging and zagging, some leaping forward due to high demand/low supply and others remaining relatively static.

And then there is Part 2 of our response:  Aside from all the normal zigging and zagging, what is happening to pay rates in the wake of continuing economic upheaval?  My answer would be: Not a lot, at this time.  Although salary freezes are being contemplated and implemented, recent research tells us that - at this time - most organizations are planning to go forward with their original salary increase plans.  Lay-offs are occurring and are predicted to continue, and the influx of these job seekers into the labor pool will put us even more firmly into a buyer's labor market.  In the near term, I don't see much of this impacting the market pay levels of most jobs.  Employers - again, at this time - seem to be signaling their intent to keep pay competitive, even in situations where they are reducing a portion of their staff.

In the longer term, it will depend on a number of things, not the least of which is the degree to which employers hire in at lower pay rates because the buyer's market allows them to do so.  There is one relatively easy prediction, though.  This whole thing will play out differently for different geographic markets, different industries and different jobs.  And there will continue to be shortages in certain skill areas, which will drive the compensation of those positions up.  The zigging and zagging will continue.

What to do? For now, here's my advice.

1. First, accept that the data on which you must base decisions is lagging market reality, but that the market will likely follow a somewhat predictable path in the near term. 
2. Secondly, and more importantly, know that you are going to have to apply wise and thoughtful judgment. Become - and stay - very knowledgeable on what is happening in the labor markets from which your organization draws its talent.  Your organization's ability to wisely gauge the market and steer pay practices accordingly will rely on your ability to apply informed judgment to available market intelligence. 

Read, pay attention and embrace opportunities to network and exchange ideas with your peers.  This is an opportunity to show expertise and leadership.  Let's step up to the plate and do it.

Comments

[Ankur]

cheers. This can be used as a ready reckoner anytime.

I also follow a blog on Importance of Human Resources:
http://managehrnetwork.blogspot.com/

Rgds,
Ankur
http://managehrnetwork.blogspot.com/

[Ann Bares]

Thanks, Ankur!