Getting what you're worth
Online salary data helps level the playing field in salary negotiations.
Hike many employees, Todd Britton felt he was underpaid.
A few months before his annual performance review, Mr. Britton was surfing the Internet and noticed a banner ad for Salary.com, which offers free salary data and personalized data for a fee.
"I went to their website and looked at their offer," he recalls. "For the price, I felt that if the personalized data helped me get a raise, I would be ahead of the game. If the data didn't help me get a raise, I would at least be more informed about how I fit into the industry."
Britton, a senior network analyst at American Suzuki Motor Corp. in Brea, Calif., reviewed the information from Salary.com and looked for additional online resources to validate the data.
"I then provided all this data, along with documentation of my accomplishments and completed projects, to my direct supervisor and my manager, and asked for an opportunity to review everything with them," he says.
The salary information indicated that there was a marked difference between what the industry was paying locally and what Britton was earning.
"Obtaining the data better prepared me for the entire salary negotiation process," he says. "I felt much more informed and justified in my beliefs. In essence, I felt validated."
Britton got his raise. "My manager had done his own research, but with the information I obtained, he was able to get a much better picture of the industry and how we fit in," Britton says. "He later told me that he was able to use all the data to help justify a salary increase to upper management."
For most employees, accurate, up-to-date information about the market value of a job was virtually unobtainable until just a few years ago.
Employers commonly purchased expensive survey data and held the information closely; employees relied on sketchy anecdotal reports from colleagues at other firms.
With the Internet, everything has changed. Employees now have access to current, geographically specific salary data for a wide range of jobs.
In addition to salary sites such as Salary.com, industry groups post survey data with salaries for specific job titles. Online cost-of-living calculators allow users to see what their salary is worth in another city. The big job boards often provide salary data on their websites for job seekers. Dilbert.com offers a Catbert salary calculator.
Many potential employees now walk into job interviews with solid information on market rates for the position they seek. Existing employees sit down for their performance reviews with full knowledge of what competing companies pay for their position.
"Job seekers must ask themselves, 'How much are my skills and experience worth to this employer?'" says Michael Caggiano, CEO of TrueCareers, an online job board. "Until recently, they were at a loss in answering this question because of the difficulty in finding reliable salary information. Job candidates want a good salary that reflects how much a company values their skills and experience, and online salary data is the fastest way to achieve this goal."
Jay Tetzloff is settling into a new job as vice president for a consulting firm in the Twin Cities area. He used online data from Salary.com to boost his total starting compensation package from just under $85,000 to more than $125,000.
After the company made its original offer, Mr. Tetzloff says, "I looked online because I knew I was worth more, but didn't have any independent source to verify my gut feeling. The salary report helped me think of all the factors affecting my market value past positions held, education, the local market, and my total experience."
Tetzloff then constructed a new "bottom line" total compensation figure as his minimum for accepting the offer and looked for creative ways to get there through a base salary increase and reimbursement for a number of job-related expenses. Tetzloff believes the new package was beneficial for both him and the company.
Salary.com, based in Wellesley, Mass., is the megasite for salary data. With more than 2.4 million unique monthly visitors out of a US workforce of 142.5 million, Salary.com estimates that 1 employee in 5 has viewed salary information at its site in the past year.
"Traffic on the site is 20 times heavier than it was when we launched in January 2000," says Bill Coleman, Salary.com's senior vice president for compensation.
Based on a survey of users who purchased its premium data product, Salary.com believes that visitors are roughly equally split between job hunters (39 percent, including those relocating or changing careers) and employees anticipating a performance review or promotion (37 percent). The remaining 24 percent purchased data for other reasons, including curiosity.
Difficulties with the online salary sources arise when employees search for data on uncommon jobs.
"Most employees who are seeking information on the value of their job, however, are those whose jobs are relatively less complicated by years of unique experience," says Frank Black, president of The Washington Group, a D.C.-area affiliate of Management Recruiters International. "Individuals in those career positions can fairly easily gain insight into how their pay matches others."
Some employers challenge online data presented by employees, claiming that the job used in the data does not match the employee's position.
"If an employer does not agree with the match," Mr. Coleman advises, "the employee can ask to see the job description the employer used to benchmark the job in question, then either research the value of that job or ask to see the employer's data. If it is difficult to find a benchmark job in the market data source, the employer can show the employee how a compensation professional would apply a premium or a discount to a job that is considered a partial match."
For the employer, a conversation about job matching with an employee is an important "teaching moment" about the company's compensation philosophy, Coleman says.
"It is critical for both sides to realize that the purpose of the conversation is to come to agreement about the employee's role and performance and to discuss how that relates to compensation in the context of the employer's value of those criteria," he says.
Colleen Stenholt, senior vice president of human resources at Metavante Corp., a Milwaukee-based financial-services company with 4,000 employees, says her company encourages employees to openly discuss their compensation with their managers.
She cautions against using online salary surveys as a single means for negotiation, however.
"The online survey must be a proven, credible source that meets the same standards and criteria established by our compensation team," Ms. Stenholt says. "These standards include sufficient sample size, information about jobs similar to ours, data from similar industries, and information from markets where we recruit."
Mary Wong, president of HRizen Solutions, LLC, a human-resources consultancy in Houston, also warns employees not to rely solely on online data to support their salary increase request.
"Employees should use the online data source as one tool to gauge the ranges that specific jobs may pay," she explains. "While this source may be helpful, it is always best to find a second source of information to support their efforts in negotiating their compensation package."
Ms. Wong recommends that employees buttress their online research with information from the Occupational Outlook Handbook published annually by the US Department of Labor's Bureau of Labor Statistics. The handbook outlines most occupations, the responsibilities and typical qualifications of each, as well as the future outlook and earnings potential.
Many employers view the new pay transparency created by online data with fear and loathing, but historically, performance and productivity improve when information about any market is widespread and accessible to all parties.
"Access to pricing information is a prerequisite of an efficient market," Coleman notes. "It is in the interest of both employer and employee to make market compensation information available to both sides in salary negotiations."
Mr. Black believes that "employees often learn that they are more fairly paid than they suspected, and a more healthy relationship can result. Most well-managed companies find this information to be conducive to creating and maintaining a healthy working environment."
Several job websites carry salary information. But sifting through the differences between one salary survey and another can cause confusion. To help judge the quality of salary data, Colleen Stenholt, Metavante Corp.'s senior vice president for human resources, suggests job-hunters do the following:
Find out if the data are current and industry-specific.
Understand the geography behind matched jobs. Salaries differ by location because of variations in the cost of living and labor markets.
Learn how the data were gathered. When individuals report their own salaries, they may exaggerate and skew the data.
Know if the job was matched simply by job title or by using a thorough job description. Matching by the title alone does not always provide an accurate picture.
Find out whether the survey includes contractors. Contractors typically are paid at higher levels, so they can skew the data.
Consider how many companies participated in the survey, and how many people are in each job covered. The larger the sample size, the better the information.
Once you know your market value and your prospective employer, put that knowledge to use. Tony Lee, editor in chief of CareerJournal.com, offers these tips for negotiating your salary:
Size up your competition. You may have unique skills that are in great demand, or you may be one of several qualified candidates the company would be happy to hire.
Don't disclose what you know too soon. Conveying too much to a potential employer about your bottom line may limit what you get.
Consider value of the total package. You might be able to find creative "trades" that allow you to withdraw requests that might be problematic for the company in return for improvements in areas where the employer has more flexibility. For example, you might take less pay in exchange for greater benefits.
Recognize what the employer can and cannot do. A start-up company may not be able to offer a market-rate salary, but will typically offer stock options.
Know when to quit bargaining. Being perceived as greedy or unreasonable may cause the deal to fall apart. Job negotiations are the starting point for your career with a company. Get too little and you're disadvantaged throughout your career there; push too hard and you can sour the relationship before it begins.