Compensation Surveys The Right Way — Don’t Make My Mistake

Before I returned to Merces Consulting, I spent many years working on my own and raising my family.  During that time I managed to keep busy doing independent consulting, the majority of which was spent conducting market surveys for local hospitals and other compensation related activities.  In doing so, I learned a valuable lesson that I’d like to pass along …

When I was employed as a Compensation Specialist for a hospital many years ago, we had a practice of calling other peer hospitals to trade salary information.  We never colluded in the sense of “our hospital will pay this much if your hospital agrees to pay that much”; there was no nefarious intent.  It was a simple exchange of information (usually salary range, effective date and average hourly rate) that we would then review with management and use to base our own decisions on, to ensure we were competitive.  It was quite a common practice in the early 90’s and other competing hospitals called us for the exact same thing.

Since most of us revert to doing what we know, when I was on my own and asked by a client to conduct a salary survey I followed that same format; calling the hospitals identified by the client, collecting their information, averaging it all together and returning it to the client.  As an incentive for sharing data, participants were also given a copy of the results.  Over time, and at the client’s request, my reporting format changed.  It evolved from identifying individual hospitals to assigning codes; then later, instead of reporting individual data with a hospital code I only reported individual data if there were five or more incumbents in the position and the data was at least three months old.  Why such an evolution in my reporting process?  Initially it was simply because I was doing what the client asked.  Eventually though, I became aware of the federal anti-trust guidelines and while it may have been too late for me to go back and change my past practices, I did try to conform to them once it was brought to my attention.

Fast forward to a knock on my front door and a process server with a subpoena; I was being named in a lawsuit and had to turn over all my files related to the specific time frame involved in the case. Aside from being terrified (nothing like THAT had ever happened to me before), I was worried about my reputation and liability.  I was called in to give depositions, but thankfully never asked to appear in court.  The lawsuit was eventually settled, though the case dragged on for several years and let me tell you…that is one heavy monkey to have hanging on your back!

Lesson learned….don’t share salary data with peers in your industry.  Your organization’s data belongs to your organization alone and should only be shared with qualified consulting groups.  When you need market data, go to third party professionals and ask them to do the work for you.  They know the rules and will follow them accordingly.  If you can’t afford consultants, use published surveys which report aggregate data and age it appropriately.  Don’t get slapped with a lawsuit.  Don’t go through the anxiety and expense of being involved in something that could easily be avoided.   And most importantly, remember that the Sherman Anti-Trust Act exists for a reason…I sure do!

About Linda Budd

Linda is a Compensation Consultant at Merces Consulting Group, Inc. in Royal Oak, Michigan. A lifelong resident of the Detroit area who has worked in compensation consulting for 25 years, Linda is also an avid traveler, gardener and volunteer.
This entry was posted in Compensation, Competitive Data. Bookmark the permalink.

2 Responses to Compensation Surveys The Right Way — Don’t Make My Mistake

  1. Reblogged this on The Compensation Times and commented:

    Wise words from Merces Consultant Linda Budd

  2. I was quite intrigued by your situation and can empathize with the stress of going to court for your mistake. I enjoyed your suggestion to hire a third party that will be aware of the situation and will follow the correct rules in each case. I sincerely hope that anyone going through a similar situation will be aware of the consequences and what goes into consulting. I really appreciated your experience and what it taught you. Thank you.

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