Methodology

The source of Salary.com's data is one of the questions people ask most frequently about the company. The following presents, first in highlighted form then in detail, the sources of the company's data and the methodology for deriving the numbers (including why someone's salary might be higher or lower than the figures in the Salary Wizard™). It also explains how Salary.com makes money from the information it publishes for free, and the difference between the free data and the premium data.

Salary.com's team of compensation consultants reviews available, applicable market pay data to determine the true market for each job in the Salary Wizard. All of Salary.com's data is proprietary and is based on employer-reported data. It does not contain data from individual site users, placement agencies, job postings, nor any other sources that would traditionally be characterized as "unreliable" by compensation or human resource professionals.

To determine the market pay ranges, Salary.com's compensation consultants have collected and reviewed data covering more than 29 million individuals working at more than 16,000 companies. More than 90 percent of the jobs in the Salary Wizard report market pay levels based on more than 100 incumbent salaries.

Salary.com compensation consultants will only report a market pay level if there are multiple sources reporting reasonably consistent information. The data in the Salary Wizard represents national average practices; metro or ZIP code level data is based on a geographic salary equivalent factor (similar to a cost-of-living adjustment factor).

One of the most significant benefits of Salary.com's proprietary methodology for determining pay ranges based on national averages and geographic pay differentials is that Salary.com is able to publish a fair pay range for any market, even when actual survey data for employers in a specific industry and region is limited.

Salary Wizard data is based strictly on fact; it is neither inflated nor conservative to appease any group. The data reflects simply what companies report paying today.

About the Salary.com methodology

• The Salary.com methodology is a state-of-the-art process for benchmarking and analyzing jobs that builds on professional industry standards.
• Salary.com purchases the most current compensation survey reports from well-recognized, reputable compensation consulting firms.
• Salary.com's compensation consultants match our job descriptions to the most applicable jobs (if any) from each available data source.
• The compensation consultants create a composite view for each job using a proprietary mathematical model built by Salary.com. The model takes into account the statistical reliability of each data point, the robustness of the data within each data point, the effective date of the data reported, and the industry, geography, or company size biases within each survey.
• Salary.com's compensation consultants validate the data points by comparing them with other market indicators such as government data (e.g., the Bureau of Labor Statistics, which has excellent data that however is older than commercially published survey data).
• The Salary.com consultants' composite view is then a "best-of-the-best" analysis of the compensation market for each job for which the data is sufficient to report.
• The team updates the database every month to incorporate the most current reports available and to reflect the general movement of salaries.

Methodology and sources

The Salary Wizard is an interactive database of up-to-date market compensation information. Unlike compensation surveys, which report data effective as of a fixed date, the Salary Wizard is a report of a continual research study. It includes data on approximately 1,200 unique jobs and 4,000 job titles that can be mapped to those jobs. The data is intended to provide a reasonable range for typical cash compensation earned by the typical person working in that job. The data used to develop the pay levels shown in the Salary Wizard is based on the pay practices of companies of all industries, companies of all sizes, and companies from all around the United States.

The source of the job descriptions and answers in the Salary Wizard should be cited as "Salary.com," since they are the copyrighted work of our team of compensation consultants based on the review of multiple salary surveys, and our own research, analysis, and proprietary mathematical model.

Every job in the Salary Wizard has been thoroughly researched and validated by Salary.com's team of compensation consultants who have combined experience of over 40 years in the compensation and statistical analysis fields. Salary.com purchases the most current salary surveys available from well-recognized, reputable compensation consulting firms. This survey data is used for analysis and benchmarking by extracting and reporting the market salary data for each position that matches to one of the jobs reported in the Salary Wizard. To ensure jobs are appropriately matched, our analysts benchmark the jobs based on job content, not job title. Note that all data used in researching salary levels for the Salary Wizard has been reported by human resource professionals. Salary.com does not use any salary information from individual site users, placement agencies, job postings, nor any other sources that would traditionally be characterized as "unreliable" by compensation or human resource professionals.

The Salary.com research database includes information on more than 1.3 million incumbents and 5,000 companies. Most jobs in the Salary Wizard are based on 100 or more incumbent salaries.

The salary data is presented in two pieces: base pay and total cash compensation (base pay plus annual incentives). The market pay level is based on the median, or 50th percentile, of all salaries reported for a given job. This represents the midpoint of the competitive market rate for that job. To provide perspective on scope and distribution of pay amounts, the Salary Wizard also shows the range around the median that includes the half of the people in that job who are paid closest to the market median – and thus excludes the lowest 25 percent and the highest 25 percent by pay.

Results for each piece are displayed in a graph to show visually this "interquartile range." The minimum of the range is the 25th percentile, which means only 25 percent of salaries reported for a particular job fall below this level; the maximum of the range is the 75th percentile, which means 75 percent of all salaries reported for that job fall below this amount (i.e., 25 percent fall above this amount). Although this interquartile range roughly equates to the typical market range for the position, there are a reasonable number of people whose pay is higher or lower than the interquartile range – in fact, 25 percent of those in any given job are expected to be paid above the 75th percentile and 25 percent are expected to be paid below the 25th percentile.

Although the data sources we use are the most recent available, there is a lag between the effective data of the salary information they report and today – sometimes more than a year. To recognize that salaries increase faster than studies are printed, Salary.com uses the industry standard approach of modifying the data by applying an aging factor to adjust the data to a common date and to accommodate the movement of salaries over time. Not all salaries move at the same rate. For instance, in the last few years, salaries in the information technology field have increased much faster than salaries in other jobs (5 to 15 percent for IT versus 2 to 5 percent in general). Therefore, IT salaries are adjusted at a higher rate than non-IT jobs.

Geography

The Salary Wizard data represents the typical person in a job based on national average information. The Salary Wizard lets the user specify a metropolitan region that applies a geographic differential to reflect differences in pay levels in different cities or geographic areas. These differences are similar to, but not the same as, differences in the cost of living. The national average salary for a job (which is returned if the user does not enter a ZIP code or region) is given a weight of 100.0, and salaries in other regions are expressed in relation to the national average based on cost of living and purchasing power. The adjustments range from 75 percent of the national average for San Juan, Puerto Rico, to 124 percent of the national average in Fairbanks, Alaska. Toledo, Ohio is at approximately the national average.

For entrepreneurial organizations siting business in new areas, Salary.com is sometimes the only available source of compensation information. Salary.com's geographic adjustment factors provide a good approximation of a fair pay range for a given job regardless of how many people have that job today. This research can be very useful in determining the value of a job that has not been offered in a given area before. For example, if a new factory is opening in a rural area, there might be no comparable pay information for many of the factory worker jobs, but they nevertheless need to be filled. Without estimations like those used in the Salary Wizard, neither the entrepreneurs nor the potential employees would have a source of fair pay data. It would probably be well over a year before that data became available. In fact, the data might never be published in a conventional compensation survey if the new factory were the only such employer in the area.

We periodically compare our geographic adjustment factors to actual market data for given geographies to ensure that our adjustment factors reasonably reflect the market. As we find a geographic area speeding or slowing relative to the national market, we modify the adjustments for that geography and review the surrounding geographies for similar potential adjustments.

Job Titles

A job title is a quick way of describing a collection of tasks, responsibilities, and duties. Please be sure to read the job description for each job you look up in the Salary Wizard. The job descriptions outline the skills, experience, and knowledge needed to perform the job. The descriptions will provide you with a much clearer sense of what the job entails than just the job title. This will allow you to choose the best match for your job or any other job you're interested in.

Note that if a job description is a "pretty good" match but not perfect, the differences in the skills, experience, and knowledge could translate into a difference in market compensation. Keep this in mind when reviewing the numbers presented in the Salary Wizard.

There are two important cautions to remember when comparing a job description to a job descriptor in the Salary Wizard. First, be honest about the skills and abilities of the person whose job you are reviewing, especially if it's your own – for example, being able to use a spreadsheet doesn't make someone a programmer. Second, if a person has skills greater than those required for the job, it is important to assess whether those added skills are of added value to the company.