2023 is underway and organizations have positions to fill. But in an ever-changing job market, how are job salaries determined? What is too much for a particular role? What is not enough? How do they change from year to year? Is that information possible to find for highly specialized roles?
Salary guides are how companies and job seekers navigate all of it.
But what exactly is a salary guide? Is it really that important? And how does a company use one?
What Are Salary Guides?
A salary guide is a document produced by companies all around the world detailing different positions within a specific industry, typically the one the company is a part of, and what the average salary for each position is. Therefore, a tech company might include positions such as engineers, while a nonprofit might include positions such as public relations coordinators.
But how are these guides put together? How is the data gathered? The simple answer: salaries are determined through market research and recruiters. But what does that mean exactly?
There are a couple of ways salary guides can be put together. Recruiting companies, such as STAND 8, compile information from the positions they recruit for. Some companies compile publicly available information on what certain positions are being sought by other companies. And many companies do both.
Overall, the data shows what companies are willing to pay for sought after positions and what the wages are of similar positions the company has already disclosed. Certain companies, such as SHRM, specialize in this data and are world leaders in providing such information. The research a company does is done across an entire industry and the information is condensed into averages that are more easily digestible.
How do you know if the information in the salary guide you come across is correct?
First, take a look at the company producing the guide. Are they a recruiting company? Are they a leader in their industry? Or have you never heard of them before and can’t find their credentials? Once you have determined the company is reliable, then compare their findings with other salary guides. Cross-referencing ensures you are not making decisions off of misinformation.
History of Salary Guides
Countries around the world have a varying history of determining and disclosing the wages of laborers. For example, in England, laws were passed in the 1600s expressing the amount that was fair for laborers to be paid. Then, when the United States separated from England, it followed suit and continued to publish what was considered ‘fair wages’.
Shortly after the United States’ independence, citizens took the published information and argued for better wages. And by 1794, the first union was established. The United States government continued to publish the data accumulated on wages across the country, a job that was taken over by the U.S. Department of Labor when it was established in 1913. Laws are still in place and enforced, both federally and on the state level, to establish fair wages in the United States.
But these companies did not create salary guides because they are required to by law. In the latter half of the 20th century, they followed the trade organizations’ example and started producing their own guides. By the 1980s and 1990s, organizations were producing salary guides annually.
Salary guides have a long, established history; England and the United States are just two examples. But why have they persisted? Why do organizations find it so important to continue to produce them, year after year?
While salary guides are most often used by HR professionals and recruiters, they can be utilized by anyone. But what are they used for?
Turns out, a lot of things.
How To Use Salary Guides
The first things salary guides point out are trends in the job market, both with salaries and the jobs themselves. Which jobs are emerging because of technological innovations? Which jobs were more common in the last couple of years? Which jobs are becoming less popular over time? When comparing guides, the trends become easy to spot. A company can easily make informed decisions with that data.
Some of those informed decisions involve staying competitive within an industry. How much should an organization be paying its employees? These guides are a way to gauge that.
Even though companies are focused on their bottom line, they do not want to underpay their employees. That will breed dissatisfaction and will eventually push employees to leave. Companies need to ensure they are paying competitive salaries, or candidates will choose positions that are more attractive and incentivizing. If a company is advertising a job with a salary drastically out of range, candidates will not even apply.
But organizations also need to be careful not to overpay either. Drastically overpaying, while good for the employee, is not great for the company’s bottom line. Keeping within the market’s averages helps balance the budget.
Finally, with market research in hand, companies and candidates can be on the same page. Both parties are doing research when filling roles, and both should be finding the same data. When both parties are aware of the salary range for the role neither will want something outrageously high or low and take the other by surprise. It will be much easier to find a rate both can agree on.
Make Well-Informed Decisions With Salary Guides
Salary guides are essential to the job market and are used both by candidates looking for jobs and organizations trying to fill positions. Salary guides are essential to helping companies and candidates navigate the market, evaluate needed skill sets, and determine fair market value for those skill sets.
Creating and utilizing a salary guide will ensure organizations are well-informed and can then make knowledgeable decisions when growing and filling positions. Not all companies create salary guides, but many do. Salary guides are a fantastic resource and are useful in every industry.
Click here to review STAND 8’s 2023 IT Salary Guide
