Salary data and the small Rewards consultancy : some boundaries

Reader Question - Compensation InsiderI am regularly asked by potential clients for support in gathering salary data and market benchmarking. Small and mid-size companies often don’t have internal resources to handle what, for them, tends to be an infrequent exercise, so they look for outside help when it comes to make sure that their pay levels are aligned to market.

Obviously, as a 20+ years veteran in Performance & Rewards, this is something I am happy to help clients with. We offer 3 levels of service around using salary data, from the most hands-off to the most inclusive, depending on what the clients look for :

  1. Training / educating HR on how to select the best provider, and then participate and use the salary data from the survey to create or update their pay structure,
  2. A more active support throughout the process, including helping them think about who to include in their peer group, reviewing the survey submission file prepared by HR, to quality control on the data received from the provider and checking of the ranges created by the client’s team,
  3. Done For You services where my team of partners and I perform the whole exercise on behalf of the client.

What these 3 options have in common ?

The quotes we propose never include the salary data itself, nor the cost of participating in the survey (which obviously depends on the provider).

I recently received the following question from one of my potential clients :

We’ve got one more quote for the same exercise and I’m bit confused as they do not request us to participate in the survey as they will access the data on our behalf. Basically it is included in the cost. How this is possible?

I thought about it and see 2 possibilities.

Possibility 1 : The other consulting company has their own survey and salary database

That would be the case for example if you ask Hay, Towers Watson, Mercer, AonHewitt, our partners MEIR Global, or some specialised industry survey provider like McLagan (they do only banks and financial services) or Birches Group (for NGOs) to do some benchmarking for you.

But, in my experience, these survey providers often charge for the survey separately from consulting or coaching work : there is a specific line for the survey cost in their proposal.

That’s because in most cases, their Survey department and their Consulting department are not the same and they have separate internal accounting for these – survey is a product, consulting is a service.

Possibility 2 : The other consulting company uses someone else’s data

Smaller and mid-size  HR consultancies like mine don’t own any proprietary market data (ie basic salary, allowances, incentives and benefits information), as we are too small to produce our own compensation surveys.

So my guess is that the company providing you with a quote somehow may have access to some survey results from another provider, such as the ones mentioned above.

Maybe they’ve taken it from work with another client, or taken it from their previous employer (if the consultant recently left the corporate world).

For full disclosure, The Bardot Group does have access to salary data and survey results through our work with other clients who have participated in formal compensation surveys. But we pride ourselves for our reputation of work ethics, deep practical knowledge of Compensation & Benefits issues, and customised advice to our clients.

So, we will never use this data for work with another client, as this would be in breach of intellectual property of the companies running these compensation surveys. It also does not respect the confidentiality of our work with our previous clients.

What to ask the consultant about the salary data in their quote

Whichever way your company decides to go, I strongly suggest that you investigate further with the other consultancy where the data comes from in their quote. If it’s Possibility 1, great !

If it sounds more like Possibility 2, then you may want to dig further :

  • Ask if the data is theirs. You should get a clear Yes or No answer to that question.
  • If they claim to have their own survey, ask for their brochure, pricing and a participants list. Reach out to a few random companies to check out their feedback on the survey.
  • Also ask when the survey was last run. Ideally, the data should be fresh, and never more than 18 months to 2 years old. If the salary data is too old and has been aged multiple times, you run the risk of being disconnected from market reality.
  • If they don’t have their own survey, ask how and when the data/survey results were acquired : was it from work with another client ? Is it from general information found, often for free, on the internet and magazines ? Is it from their last job in-house ? You should get a straight-forward answer to that.
  • Ask if they have the legal right to use the data for their work with you. Ask them to put it in writing for you. Ask for a copy of the agreement allowing them to use that data, or even check with the initial data provider. You don’t want to have any potential legal issue coming your way because a small consultancy was a bit too eager to win your contract !
  • Ask how they intend to produce customised results for you, from a mathematical/technical point of view. They should be able to demonstrate it to you.

The answers to these questions will help you ascertain the legal, and potential moral, issues that may arise if you decide to work with that consultancy.

Even though I have a very clear stance on that topic and will never use salary data accessed through another client or provider and use it with a new client, I am not here to tell you what you should do from a moral or ethical standpoint.

It is true that small and mid-size companies often initially hesitate at the idea of paying for participating to a salary survey.

However, compare that cost to the annual salary costs of your workforce, and you will see that it’s definitely a worthy investment, especially when you know how to use the results in order to produce salary recommendations that are fit for your business – or when you have a great Rewards consultant supporting you in the process ;-). And it’s definitely less costly than a potential lawsuit !

 

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Comments

  1. I was very pleased to see your stance on ethics in the terms of holding and sharing data.

    As a former Director at Meir we were all too aware of data being shared outside the terms of supplying data. I was most surprised that the company quoted did not require input from the client company; but we recognised that new companies in a territory were not able to provide it though they were bound to provide pay data in the next year when they were established.

    As far as Birches is concerned I agree that they primarily cover has been NGO’s but my new company THP HR Consultants has just become their representatives, based in the UK, to expand the successful format for emerging markets in to commercial organisations.

    • Thanks for your comment John. Integrity and confidentiality are basic values at work, but I think, like you, that they are even more so important for HR and especially Rewards professionals.

  2. Great Post & very informative , Thank you Sandrine

    I have a question , we are a group of 23 companies different business lines and our salary grades and scale is a standard for the group not customized as per business line which I think not correct.

    However , If we would like to make surveys on the current situation , should we do it group wise or company wise ?

    Ihab Azzam

  3. Excellent summary, Sandrine. The ethical behaviors you’ve outlined are exactly the right ones that all consultants should follow. When we work with other consultants, it is the client who grants permission to the consultant to access the data we provide, subject to executing a non-disclosure and confidentiality agreement which binds the consultant to terms and conditions that essentially limit their use of their client’s data subscription to the project at hand, and prohibits them from using the data on behalf of any other clients.

    Also, to expand on John’s comment above about Birches Group, while we do have separate NGO surveys in many countries, Birches Group serves many multi-national, regional and local companies in the private sector across 148 markets though our multi-sector surveys.

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