Clarity and insight

Some companies use no professional salary data at all, relying instead on an amalgam of anectdotal observations, often from the employees themselves. This gives them a scattered and inaccurate image of the salary market they are in, formed by singular, unrealiable and incomplete observations.

This might be workable for a smaller company with internal structures governed by personal relations. For a larger organization it will invariably lead to overpaying and loss of talent. 

Without a market alignment based on data the company is essentially using a method of trial and error to adjust their salary levels. Since they are limiting their observations to just their own population, it is only possible for them to determine the lower bound of their salary levels. When people quit because of too low salaries.  

Not only is this a very expensive way of determining the lower bound – lowering the salaries until the level that people quit – it also gives no information about the upper bound.  Meaning that it is very likely that the people that do stay are overpaid.  But by how much?

Most companies have employees as their greatest asset. This makes reward strategy – which aims to attract, engage and retain the right employees – essential to company performance. Accurate market data is a necessary foundation for any succesful reward strategy.

The very same companies often have employee remuneration as their greatest expenditure. Optimizing employee pay strategies becomes crucial to company bottom line. For this you need accurate market data.