How to Navigate Conversations About Online Compensation Data

One of the most prevalent compensation conversations in the workplace is about online pay data: from various sources ranging from employer websites to recruiting websites such as LinkedIn, Glassdoor and Indeed. Is it good? Is it accurate? How is it different than the information my employer uses to make decisions? Why is the range so wide when I start to look at a variety of sources?

Frequently, people managers and human resource team members find themselves in a defensive position trying to explain differences between online data and company practices, all while trying to elevate conversations to include a more robust total reward, career development, and workplace culture perspective. Since it is difficult and often impossible to confirm the source of data available online (or it is simply a single organization’s range of pay with no insight into actual compensation), explaining data online will be a difficult task. To put your organization in a position of strength as you support employees on their career journey, partner with key stakeholders in your organization to create an easy-to-understand (and communicate!) framework for how pay decisions are made in your organization so—absent any other guideposts—online data is not the only information available for conversations about pay.

Identifying the relevant scope of data for your organization

As you prepare to discuss compensation more openly, be prepared to understand the scope of information that is most relevant to your organization, including questions such as:

  • What is the market for the talent you seek to draw and retain? Think more broadly than just where you do business or serve the community.
  • Is the market different for certain employee groups, geographies, or areas of specialty? It is ok to segment your approach in support of the strategic realities of the organization.

What role does compensation play in the larger rewards program strategy? This allows you to identify your target place in the market range (e.g., the 50th percentile).

When people talk about “the market” it can mean very different things depending on the perspective, audience, and phase of the organization; being ready to communicate how your organization defines the market will build trust and provide meaningful context.

Anchoring to the years of experience required to effectively execute the role

It is natural for an individual to benchmark themself as they seek to obtain information online about their current or potential compensation. Best practices define the market range based on the role itself, not the individual(s) that deliver on the role. Regardless of whether the data available online is relevant, accurate, or consistent with how your organization determines pay, educating employees about how to source information that aligns with your pay practices creates a more reasonable and sustainable approach to pay including the following activities:

  • Identify the years of experience needed to deliver on the role (picture what you may include in a job posting).
  • Select a scope that both reflects the market for talent, and the market that defines the organization, if different.
  • Target individual pay within the market range for the role, based on competence and ability to fully execute on the impact and outcomes expected of the role

It is not inappropriate to pay inexperienced employees who are still developing lower in the range of pay than individuals who have consistently executed the role with a high level of competence, tenure, and impact beyond the baseline expectations of the role. Leveraging the full range of pay, and being prepared to explain how you do that, will help individuals understand not only how their pay was determined today, but what additional compensation opportunities exist in their current role.

Bringing it all together

But what about those pesky questions we listed at the beginning of this conversation, how do you answer them? After over 20 years as a compensation specialist, the answers are maybe, sometimes, it depends, and the market is always a range. Not very reassuring? We agree. It’s time to shift the conversation to the information you can rely upon with great confidence.

If your organization does not have any structure or formality related to your compensation and rewards program, the abundance of online compensation data suggests that your organization will enhance and improve employee engagement and leader effectiveness by prioritizing the following activities:

  • Define your organization’s compensation and total rewards philosophy.
  • Create pay structures, with grades and ranges, that assign positions based on relevant market data, internal equity, and other organizational factors.
  • Educate your people leaders and employees about compensation “basics” and the current process for how you determine pay and what communication channels exist for educating, understanding, and asking questions about current and future compensation growth opportunities.
  • Embed communication related to compensation in all phases of the employee experience so it becomes less taboo and more widely understood.

Still dreading that online pay data conversation waiting around the corner? Committing to the plan shared above will likely create the foundation for a response that may go something like this:

“Thank you for sharing this information, as your leader I want to know you have questions and concerns about your compensation. Let me share more about the data we use to make pay decisions at our organization, and how it compares to the information you shared with me today. There are so many investments we make in our employees; we value the opportunity to discuss our rewards programs in more detail so you can fully understand how we align your impact and contributions with our pay programs.”

Although not everyone will like the outcome of the discussion above, having a thoughtful response will illuminate the conversation and show that pay decisions at your organization are informed by data and determined in a fair, consistent, and reasonable way that considers many factors well beyond what an online source may report in a vacuum.

Consider setting a strategic goal to provide baseline “Compensation 101” education to employees so they are confident decisions are consistently informed by internal and external data, calibrated across the organization, and periodically reviewed to ensure it aligns with the intended compensation and rewards philosophy, pay equity and the strategic priories of the organization.  Not sure you are ready? The MJ Companies Compensation + Total Rewards team can help!