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How HR Pros Can Use Online Compensation Data

Jan 2007
Many sources of data can be found on the Internet that reveal compensation practices with regard to base pay, cash incentives (short-term incentives), equity incentives (long-term incentives), benefits, and perquisites. Such information is typically characterized by organization size, industry, and geography.

In a sense, online compensation data is nothing more than compensation data that has been delivered online. In the case of, our data begins as the same human resource reported compensation data HR professionals are used to using. Our Certified Compensation professionals then perform extensive analysis on the data, taking the time to do the work compensation consultants are hired to do for large corporations. The data contains the same information as paper reports, only without the paper and the printing-related delays.

Online data provides users with many benefits, such as easier access to information and interactive capabilities including the flexibility to cut data as appropriate. Multiple parties can share an online database more easily than they can share other databases. Additionally, the Internet is a less expensive delivery vehicle than traditional media.

How accurate is online compensation data?
Most compensation data providers publish information online. They include HR consulting firms, recruiters, staffing companies, and newspapers and magazines. Some users originally greeted the arrival of compensation data online with skepticism, as if being online somehow detracted from the quality of the data. But the Internet is only the delivery vehicle; the data is the substance of most online compensation products. Good data is useful and usable regardless of whether it is on paper, diskette, CD-ROM, or the Internet. Bad data is in no way better if it's printed on paper rather than on the Internet.

When evaluating the accuracy of online data, HR professionals should validate it as if it were any other data without regard to whether it's on paper or online. Review the methodology to ensure that it adheres to professional standards and principles. Be sure the data is relevant to the jobs being researched. Assess the "comp"-etence of the publisher to publish statistical results. Validate the data against known values, such as surveys typically used to benchmark the same jobs. And consider the agenda of the data provider.

For data businesses, accuracy is essential - and the accuracy of any data source will speak for itself. Using multiple, equivalent sources is one way to ensure the accuracy of an online data provider.

Where does online compensation data come from?
Online or off, compensation data comes from the same types of sources.'s data comes exclusively from surveys of HR professionals. The original source of other online data can be any combination of the following: employers (primarily via HR professionals); recruiters (primarily from placements); job boards and classifieds (through data in postings); and self-reported data from individuals. Be wary of organizations that use self-reported data, which maybe instantly reportable, but has no method of validation and benefits the user if inflated values are reported. does not include user reported salary data in any products. In evaluating any source, read the methodology and the "about us" section of the publisher's Web site. Validate the data against other publishers of the same type. Also, read the footnotes and the source notations.

Is free data really free?
We all rely on numerous "free" data sources everyday for various purposes. These free data sources are considered credible. TV and Radio network news, public libraries, stock tickers, and research sites that publish proxy data are all solid sources of free data. Of course, free data is not really free. It might be free to users as a form of subsidy for another product or service. For example, HR consultants earn most of their revenue from consulting services. Recruiters get their fees from placements; publications, from advertising and subscriptions. Software companies earn revenue from sales of software licenses. Web-based businesses might use a combination of the above.

Online data is now just a new data source.
Online data has opened many new doors and introduced a change of paradigm. The near-zero distribution costs for online data have made data aggregation, that is, wide-scale market pricing, economical. Internet pioneers in most vertical markets, including compensation, have used mass distribution to make information widely available. Those changes were initially met with fear, uncertainty, and doubt. But as time has passed and the quality of the data has been assured, the evolution of online sources has accelerated and comfort with the sources has increased.

So, ignore the medium in which the data is published except to the extent that it creates a positive user experience. Learn what you can about the sources of the data. Review the methodology and see whether the data fits your needs. Use it if it's practical and appropriate to do so.

- Bill Coleman, Senior Vice President of Compensation- Modified 11-15-2004

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