In recent conversation I have heard talk from friends with a couple of the “big firms” recently that there is a growing fear the salary survey business may be fighting for survival soon. Seems there is a belief that LinkedIn or other social media will jump into the game and facilitate sharing and benchmarking of salaries by job, by location, industry, etc.
I believe we will see salary surveys on social media, but I don’t believe it spells the death of professional salary surveys. Here’s why:
Inflated data–the only way social media can source data in statistically sufficient volume is from its millions of members. Ok, so let’s say TwitBook launches a salary survey. They have you answer 5 questions because their entire worldview is that people are attentive to anything for 5 seconds max. The site already knows your location and industry and if employed, your job title. So you just enter your salary and maybe your last bonus. Boom! Get this info from a million people and sell access to it (job seekers and job haters will pay) and there’s an extra 20-25 million dollars for TwitBook. This will probably happen, but who uses the professional surveys? Employers. Employers aren’t stupid. You see, my 30 years of figuring out who makes what (that’s what comp & ben people do) tells me that at least 1 in 10 people will overstate their salary to pull the numbers up (so they can hopefully show their boss how underpaid they are) or because they believe TwitBook will sell data on people’s salaries (it will become the property of TwitBook, no doubt) and so they will inflate their salary to establish high salary requirements from a potential employer. The people with the lowest salaries may inflate their salary to avoid pulling down the normal market number, or out of fear someone will find out how little they earn. Or the low earners will just not submit their salary for the same reason.
Limited data–Bigger employers aren’t stupid. They look at total rewards, not just salaries. The professional surveys from firms like Hay, Towers, Mercer, 21st Century, Radford, AONHewitt or others– provide data on salaries, allowances, actual bonuses, target bonuses, long-term incentives, benefits and several other rewards elements. Employers pay large fees and commit to an arduous data submission process in order to get the full picture on total compensation. Any form of social media survey will fail if they ask individuals to submit complete information.
Old data–surveys produce aggregate statistics on pay, by calculating averages or various percentiles of pay to show the range of market data. But what happens to all those individual data points after 1 year, 2 years or 5 years? Do they vaporise? Are they aged or trended forward like the professional surveys? What if the person who reported a salary has left their job? Will they contact TwitBook and tell them to remove it from the database? What if they don’t update their TwitBook profile to maintain the appearance of still being employed? There are so many issues regarding data validity, it makes my head spin.
Other reasons the professional surveys will survive include easier survey submission and reporting, streamlining of data requested to essential (most common) compensation elements, surveys for smaller employers or niche industry sectors or occupations, and more competitive pricing. These factors will favor players like 21st Century whose survey covers all the key total rewards elements, yet requires only a fraction of the data requested by the big guys. The participant cost of 21st Century’s RewardOnline is less than half the big firm surveys. (See more on 21Century’s RewardOnline here.)
When it comes to compensation surveys, big data won’t always win, because big data has a big price tag and causes big headaches if it’s your job to “feed the beast”, i.e. complete a big firm survey. The whiz kids at TwitBookIn can cook up a salary survey on social media using big data as well, but this has limited value, as the numbers will be inflated and inaccurate for a dozen other reasons too lengthy to cover here. But social salary surveys may serve as a wake up call to the big survey providers to keep it simple, cheap, and better.