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Find Out How Much You Should be Paying (and Earning) with PayScale
Find Out How Much You Should be Paying (and Earning) with PayScale
January 3 2014
The question of whether money is a good motivator for employees is an ongoing concern for human resources (HR) professionals in particular and businesses in general. An article published earlier this year on the Harvard Business Review blog—“
Does Money Really Affect Motivation? A Review of the Research
” by Tomas Chamorro-Premuzic—explores the topic. One aspect that Chamorro-Premuzic looks at is if higher salaries make work more enjoyable for employees and if money should be looked at as the basis for an engaged workforce. Apparently, according to several studies the correlation between these factors is very weak. Another topic explored by the article is whether money demotivates if seen as an extrinsic motivator (as part of the natural extrinsic-intrinsic tension). Chamorro-Premuzic states that despite numerous studies “there is still no consensus about the degree to which higher pay may demotivate”.
However, no matter how we look at money and how many angles we take to understand it in the context of our work, how much we make is definitely important for all of us. And this is not only because we need to pay bills and buy things, but also because our salary or compensation actually does matter from a psychological perspective when looking at one’s own position in relation to others in our community or society in general.
PayScale is a company that knows how important money is to those in the workforce or those looking to enter the workforce. The Seattle-based software vendor has created a tool that evaluates salaries per industry, job type, geography, etc. and delivers this information to employers so they can determine what would be a “fair” salary for their employees. Similarly, employees can access the data to see how much they are “worth” in the job marketplace. I recently had a demo with PayScale where Tim Low and Karaka Leslie showed me some of the functionality and shed light on how their offering contributes to compensation management for organizations. Thanks to the data that they collect and analyze, PayScale helps employers model compensation plans for their employees and allows employers to automate compensation management with the input of salary data into a compensation management system.
In addition to the salary information for employers and employees, the vendor publishes a
(for the U.S., Canada, and the U.K.) which measures compensation trends. Based on 40 million unique salary profiles, 250 factors of compensation, and 14,000 unique job titles, the index uses data describing all types of employees, as opposed to similar indexes which only focus on certain employee types only. This means that the index reflects overall compensation trends, and users can drill down by geography, industry, company size, and job category as needed.
On top of PayScale’s subscription software products for businesses, the company also provides a number of consumer-oriented research tools free of charge. An example is the PayScale College ROI Report, which provides insight into the link between educational institutions and the earning power of their graduates. The ROI is based on data collected from more than 1,000 U.S. colleges and universities, including private, public, and for-profit schools. Aspects such as self-employment, project-based work, and contract employees, and advanced degrees such as law or medicine are not included in the assessment. PayScale does not collect data from the institutions; all of their data is collected from individuals who went to those institutions.
PayScale offers the option to connect through a LinkedIn account and import current job information. While this is convenient, the functionality is not necessarily as well developed as I expected. For the future PayScale may want to consider adding the option to import information from LinkedIn to update certain sections of the PayScale profile (i.e., education, experience, etc.). Also, it would be helpful if account recommendations were taken into consideration, and also perhaps endorsements, number of connections, etc. when approximating a salary.
Of interest to note is that PayScale also works with an advisory board which brings together minds from MIT, American Enterprise Institute, American Institute for Research, Drucker Institute, and Heldrich Center for Workforce Development. While these advisers are providing PayScale with feedback regarding its methodology and overall solution, they can perhaps also benefit from the PayScale findings in their own research projects, and further their understanding of salary and compensation trends, which oftentimes unveil the state of certain markets and reveal social issues.
Gathering information to match salaries and job profiles is relatively straightforward for some industry sectors like IT, where it’s very clear what skills, education, experience, and certification someone needs for specific types of jobs. But in services companies, it’s not that easy, since people skills are not easy to quantify and are not covered by certifications. For example, one cannot become certified in social media, communication skills, collaboration, etc. Despite these challenges, PayScale is able to analyze data for all types of compensable factors such as years of experience and specific responsibilities to define jobs and aid in attracting and retaining talent. Additionally, PayScale is able to help businesses where the needed skills are not defined by certifications or specific accreditation. For example, Seattle-based marketing consultancy BuzzBee
to contend for highly skilled marketing professionals in a job market where they are competing with giants like Microsoft and Amazon.
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