Salary Surveys and Negotiating Your Salary (based on payscale, salary.com, etc.)

February 7th, 2013

This is from Nick Corcodilos’ newsletter: Will a consulting firm pay me what I’m worth?

In short, the answer is… just kidding. Read Nick’s answer.

Here is an interesting snippet from Nick’s response:

First, if you’re relying on salay surveys, know when to fold them. Generalized surveys are okay to give you an idea of salaries in a particular field, but they are not a good place to start negotiating your own salary.

I’ve always disliked the salary surveys and information online. I remember a boss I had who hated them because the numbers were unrealistic for our area, or our industry, or our company, or the position (or a combination of all of those).  But people would come in demanding what they found online, which was impossible.

Unrealistic expectations were set and people were disappointed.  It wasn’t good.

I’m sure the survey results have gotten better but I doubt using data from those websites as gospel truth is the best strategy.

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7 Responses to “Salary Surveys and Negotiating Your Salary (based on payscale, salary.com, etc.)”

  1. Jason,
    I love it when the candidate says, “The salary to hire me should be $20,000 more! It says so right here in this salary survey.” So, let’s talk to the guy who’s making $20,000 more in that “same” job… who is he? The bottom line is, salaries cannot be negotiated from surveys. The only question that matters is, What are you worth to this employer in this job? And it’s up to you to demonstrate that. A salary survey is not going to get you more money. The extras that you can offer will.
    Cheers,
    Nick

  2. Interesting thoughts.

    I’ve most often considered salary surveys blunt objects at best, and I know that the greatest determinant of an applicant’s future salary is that applicant’s current salary. There are a few different salary surveys for my field, communications and public relations, and they seem to vary pretty considerably between one another. Maybe vendors should release their salary surveys with a margin of error of some sort that accounts for other methodologies.

    They are, however, another datapoint one can use to make informed decisions. So long as the numbers aren’t made up, I don’t see anything wrong with having more information as opposed to less information.

  3. @Andrew: Two problems. First, there is no way to know how accurate the salary data are, or whether they were gathered properly (from the employer, or the employee?) or analyzed and presented properly. It’s a crapshoot at best. I’m not suggesting the surveys should not be considered, but keep in mind that they are descriptive (and we don’t know how accurately), not presecriptive. That is, don’t base a new salary on them.

    Second, your point about future salary being determined by current salary. That happens only if the applicant permits it. It’s almost always to the employer’s advantage to use old salary to determine new salary, and it’s almost always a disadvantage for the applicant. Far better for the applicant to insist that the employer independently assess the applicant’s value in the context of the new job. Again, old data may be informative, but they can also destroy the applicant’s negotiating edge. I cover this in a short book titled “Keep Your Salary Under Wraps.” (Disclosure: It’s a PDF book, available only on my website.)

  4. Lydia says:

    Happy to answer any questions you all might have about PayScale’s survey. The data is actually very accurate, and if an employer is saying the number is unrealistic, they may not be paying you fairly based on the market for your job/location/etc. We look at all the compensable factors that could impact your pay — job title, years of work experience, education, location, industry, certifications, etc. I agree w/ Nick that the question that matters is “What are you worth to this employer in this job?” but first you need to know what are you worth in the job market for this job? There may be other employers willing to pay you at the 50th percentile or higher, and that’s what you should expect as long as there’s not some mitigating factor — e.g. recession, slow job growth in your industry, etc. Our database is made up of 40 million individual profiles collected directly from employees and all of our data is heavily scrutinized by our data scientists. Plus, employers use our software as well to set pay for their employees to ensure they’re paying fairly for the market. Let me know if I can provide more info.

  5. I worked for a national salary survey company that covered the banking industry, and I always cringe when someone tells me they turned down a job because the salary was too low based on their online research.
    YIKES!

    It took us MONTHS to do our surveys based on automated input from the banks because we needed to be sure that we were providing apples-to-apples comparisons. The software analyzed the input, and then we called the banks to check on the data (no pun intended) for instances that were outside of what was expected.

    >> Salaries are very complicated!

    Are bonuses and commissions available or not, included or not? Is there a company car, tuition reimbursement, etc.

    >> Jobs are very complicated!

    * Bank A may require that an Assistant Branch Manager have a degree and 4 years of experience working in a bank.

    * Bank B may require that an Assistant Branch Manager have a 4 years of experience as a teller and 2 years of experience supervising other tellers.

    Same job title, but different jobs!

    >> Employers are very complicated!

    Different employers have different strategies about compensation – pay less and expect turnover (but keep salary expense down), pay more and expect less turnover (but keep expense of replacing employees down).

    And a MILLION other variables!

    I’m thinking that is what available online now is more apples-to-oranges-to-concrete blocks than apples-to-apples, and I hate it when people make decisions based on that data, regardless of the salary survey site used.

    Great post Nick and Jason!

  6. Jason Alba says:

    Lydia, thank you for jumping in on behalf of Payscale. I like it when people who work at the company actually come in and give their side of the story.

    I like Andrew’s comments… these results are “blunt” and have a margin of error, but they are a datapoint and could/should be used when trying to figure out your value as a datapoint (alongside other datapoints).

    Even though you (payscale) have a ton of data, based on 40M people, I am really in Nick and Susan’s camp on this. I think it really comes down to Susan’s comment that there are a million other variables. It’s not an exact science.

    The hairiest thing is when you ad human whims into the picture… no matter what the internet says, or what everyone else (ie, other companies) is going to do, if you have humans involved in the process there is always an element of unpredictable and illogical :)

  7. Lydia,

    All you’re confirming is that there is bias introduced by either source of data — employers and job hunters. But you’re suggesting PayScale deals with that by checking its data against other surveys and data sets that suffer from the very same types of biases. And this highlights just how profound this problem is — the data sources prop one another up, and all we have is a “data tautology.”

    (I won’t even get into the issues that Susan P. Joyce raises.)

    If you characterize your surveys and reports as descriptive, and you point out the potential biases, then your reports are potentially interesting — but only in a descriptive way. The problem arises when PayScale suggests or implies that the surveys can be used prescriptively by employers to set salaries and salary ranges, and by job hunters to estimate their worth. Then it gets dangerous, because your data and conclusions do not support or justify that use. The unique characteristics of every job hunter and every job are not captured in your data and surveys — yet it’s this uniqueness that both employers and job applicants should focus on when negotiating compensation.

    The bigger problem is that the HR profession has glommed on to third-party surveys like PayScale’s to rationalize irrational recruiting, hiring, and compensation practices. They could use PayScale data to grasp “the market,” but we all know they use it to determine job offers.

    I agree with you that survey data can be useful — but what I see is that PayScale and other such surveyors market their information a bit disingenuously. No one — an employer or a job hunter — should use the data or reports to set individual salaries. Unfortunately, that’s what the employment system does, and it’s contributed to a phony “talent shortage.” Check Peter Cappelli’s excellent work on this subject. His review of decades of data suggests that employers today want to pay far less than they used to pay for the same sets of skills — and so they cry “talent shortage.” I fear surveys like yours just feed this problem.

    Best,
    Nick

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