The Increasing Pace of Compensation Market Intelligence

I can still remember the survey room in the Chicago office of Sibson & Company 25 years ago. As a fresh-faced intern who had no clue what a compensation survey was, I was taught the process of selecting the proper binder, using the index and match codes to find the page for the right job match, and then re-entering the appropriate data into a spreadsheet to age the data and conduct further analysis. One client showed me the submission form they used to submit data to the same survey, which had recently been updated to an Excel-based submission process - and they were thrilled at that advancement.

25 years was a long time ago. But other than taking out the binders and replacing them with a web-based download of data, the world of compensation market data didn't really change that much for the next several years. That's no longer the case. New types of market intelligence have been created, and new providers and sources emerge regularly.

I'm excited about the innovation and competition in this market. The last five years have pushed our profession forward perhaps as much as the prior twenty. In this article, let me break down what we're seeing and why we're bullish on the impact this can make for compensation professionals.

Types of Market Data

As the market for market data has exploded, it has become important to have a framework for understanding the different types of data available. We've identified six different types of market data, described a bit more thoroughly in this post, and summarized in the graphic below with representative providers:

It's important to understand that all of these types of data sources can help you understand the market - just in different ways and with different potential usage within your compensation functional strategy.

If you haven't given thought to what role each of these data types can play in your market intelligence strategy, now is the time to do so. You may find the results of our 2024 CompTech Market Insight Survey helpful - there's a version of just the insights related to Market Data, and you can buy it for $50 off by using discount code MarketData50.

Another Week, Another Provider

The pace of change is increasing - even accelerating. In just the last few weeks, we've seen multiple announcements of new players launching new market intelligence offerings.

Compa announced its move into the broader Real-Time Data category, expanding from it's Offer-Based benchmarks. We wrote up our perspective on that announcement here.

Pave announced the launch of a new Offer Insights product, expanding its core Real-Time Data offering to include Offer-Based benchmarks. We wrote up our point of view on that move here.

Why is this happening now?

We believe that we're (finally) reaching a turning point, in which the anchor on legacy survey data as a gold standard is giving way to a focus on greater insight.

A few specific drivers result in now being the time for change:

1. Volatile labor markets have exposed the delays of survey-based data. Pandemic and post-pandemic labor shocks and the quick rise of AI created a need for faster updates, and survey sources were slow to provide granular insight.

2. Do-more-with-less demands on compensation teams placed pressure on the cost of administration. Teams often didn't have the resources to complete survey submissions, and data budgets didn't grow at the same rate as some vendors looked to drive through price increases.

3. Pay transparency requirements putting compensation structures in the foreground. Posting transparency requirements give employees and managers access to more data about alternatives, and Comp/TA have to show cards on the posting. This additional information has raised more questions and increased demand for granularity.

4. New compensation professionals are willing to explore. My generation of compensation professionals has long held onto "best practices." Just months ago, we found that half of Compensation professionals were concerned about the legality of real-time data (more on that here)- and there was a significant correlation to respondent years of experience. Younger professionals were more likely to adopt real-time data and be less concerned about old tape relating to safe harbors.

5. Providers look to create a moat with data. Market data isn't the only #CompTech category that has exploded. There are numerous new players with Market Management and Cycle Management offerings, which are business process solutions that may have less stickiness. One Market Management provider recently commented, "We're just a good Excel spreadsheet if we can't provide unique data."

Stir it all up, and you have a unique opportunity in the market to drive change and innovation. Providers are willing to take that opportunity and create new offerings. We're glad to see new providers step in to innovate, and we're even seeing legacy providers recognize the need to evolve and incorporate new insight into their existing solutions.

Competition in this area is good for the profession, as we have more choices and access to competitively priced alternatives. Plus, these new solutions address challenges we've had for years and give us better tools to inform compensation strategy development.

Navigating the Change

With the explosion of new data choices, it's important to have a frame of reference to evaluate your options. We recently published a framework for Benchmarking Your Benchmarks. This article speaks to the five aspects of market intelligence data you need to understand when building your portfolio of market data:

Now is the time to understand your market data portfolio and consider how to better use data.

We're hosting a free Ask Me Anything session on Friday, August 16, at 1:00 PM Eastern / 10:00 AM Pacific, where you can hear more about the trends in compensation market intelligence and ask us our view of the issues that matter to you. Register here.

Disclosure: Novo Insights is not compensated for mentioning any provider, nor does the firm or its employees receive referral a fee of any kind from any CompTech vendor. Novo Insights may participate in certain partner programs that give our team access to CompTech data and tools, and our participation in partner programs may result in discounted access to services for our clients. For more information about our approach to conflicts of interest and disclosure, view our Conflict and Disclosure Policy.