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Compensation Corner: Employers Beware: New Free Salary Data is Available in an App (and That Can Be Dangerous)!

Salary App Can be Dangerous | Total Reward Solutions

Just when you thought there was enough free salary data on the internet for employees to use and question you with, we now have a new player in the market: the “WageSpot” app. This new salary information app will make data available by ZIP code based on gender, industry, age, and job title. WageSpot, started with publicly available data, encourages employees to report their salary. Does self-reported salary data sound a little scary to you? It should. Here are some of the serious concerns I have with free salary apps and online salary data information in general:

  1. Data is only reported by job title, and there is no definition of the job to help the user determine if it is a correct match position-to-position.
  2. There are no data breakouts for experience levels. Rather, all experience is combined into one data point. Therefore, data for a 3-year software engineer could be combined with data for a 15-year software engineer.
  3. There are no company-reported data entered by specialists who know how to match jobs.
  4. Our experience at Total Reward Solutions tells us that most employees inflate their salaries when self-reporting.

Handling the Situation When an Employee Brings Up Free Salary Data

How does an employer handle the situation when an employee claims to be underpaid and demands an increase based on publicly available free salary data? Preparation is key. Be prepared to explain in general terms how the company’s compensation program is structured, including:

  • The company’s compensation philosophy (how they desire to pay employees relative to industry competitors)
  • Where the company gets their comparative market-rate salary data (from which surveys)
  • What scopes (i.e., industry, employer size, revenue/budget size, and geography) the company uses for their data

By being transparent with the employee about the individual salary range and where the employee is positioned in the pay range, it typically will help ease the employee’s concerns. (Of course, an employer should be sure beforehand that each employee is paid appropriately within the designated pay range.)

Before the Salary Data Meeting

If you are the manager dealing with the employee, you should take certain steps before meeting with the employee to discuss details regarding salary data. You should:

  • Gather information on the employee’s pay range, the employee’s pay, and the pay of any other incumbents in the position so that you can ensure the employee is appropriately paid within their pay range relative to their education level, experience level, and performance level.
  • Treat all inquiries from an employee about their pay with concern and priority. Be sure to tell the employee you will research their concern and get back with them within a few days.
  • Meet with your Human Resources department and gather all the information you need before meeting with the employee.

The Bottom Line:

It’s only natural for employees to be curious about where they stand compensation-wise when compared with others in similar positions. Unfortunately, the salary data freely available online and now in apps can be a dangerous source of misinformation that does not account for differences in market rates by region, industry, time on job, education levels, and other essential criteria.

When an employee brings up this salary data, however, it doesn’t have to create an antagonistic situation. In fact, by investing time upfront educating employees on the compensation process, and by being as transparent as possible, you can help alleviate the “black box” concern. Finally, remember that salary is only one piece of total compensation; be sure to communicate all pieces of compensation in the education process – everything from direct compensation to benefits to paid time off to training and professional development investments.

Of course, if you aren’t confident that your compensation programs are on solid ground relative to the appropriate market salary data, let us know. At Total Reward Solutions, we can help you analyze and structure compensation programs that are market competitive and sound and make it easy to address those erroneous free salary data sites and apps. To learn more, contact us today at 317.589.8529.

Cassandra Faurote

 

About Total Reward Solutions:

Have a referral for us? Total Reward Solutions is the outsourced compensation services provider dedicated to innovating total rewards that drive people and business excellence. Total Reward Solutions offers a broad range of compensation, benefits, performance management, and reward/recognition consulting services to help organizations attract top talent, motivate employees and retain top performers. Call us today at 317.589.8529 to discuss how we can help your referred organization develop and implement competitive and effective compensation and total reward programs.