IBM Moves East to Get Timely Industry Data

By Staff Report

Jul. 1, 2005

The scenario usually goes like this. A manager comes bursting into human resources with a hot-off-the-Internet article about what their industry is paying. The manager then grills the human resources executive about why the company isn’t offering similar compensation.

“Sometimes the person is right, sometimes they are wrong,” says Patrice Daprino, senior program manager, compensation, at IBM. “We don’t know what to say or do.”

The frenzy is not confined to IBM, of course. Human resources executives from coast to coast are beset by instant compensation experts at their companies.

“It becomes a fire drill and drives HR folks and compensation managers nuts because they need to find something right away to address this,” says Rick Beal, division practice leader for compensation at Watson Wyatt Worldwide.

The problem is that it is next to impossible to get up-to-date compensation data. Surveys on pay take so long to conduct that by the time they are ready, the information is often too old to be valuable.

Matters have gotten worse in recent years because the Internet has made anecdotal compensation data more readily available to everyone. But beyond being a mere headache for human resources managers, old information on compensation can mean lost credibility for the organization, Daprino says. For the companies, the consequences can be unwanted turnover as valuable employees go to competitors that offer better compensation. Old compensation data also hampers a company’s ability to compete for the best job candidates.

To address the issue, IBM turned to Clark Consulting to see if there was some way to collect data and shorten the time lag. After months of discussions and development, IBM and Clark came up with a quarterly survey of 143 companies representing 1.6 million employees.

The survey, which is open for 20 days and produced in 10, has only a one-month cycle time, which resolves many of the issues involved in the traditional process, says Ken Cardinal, managing director at Clark. The results are free to all participating companies.

The surveys also take into account participants’ opinions about what’s going on in their markets, which can offer important insights, he says. “We think it’s valuable to know what companies think about whether their market is heating up or not,” he says.

After five quarters of participating in the survey, Daprino believes there is enough data for IBM to make any necessary changes to its compensation. For now, though, the data seems to indicate that hiring in the technology sector is flat, if not a little down. And so salaries don’t need to be raised.

This data already has helped human resources managers counter claims  about pay and hiring trends. Cardinal’s recent favorite was an article that said technology hiring was ramping up. The article was published a week before the release of Clark’s survey, in which 14 major technology companies said that hiring was either flat or down.

A few weeks later the Department of Labor’s report confirmed the survey’s findings. “It was a good feeling,” Cardinal says.  

Jessica Marquez


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