That List of the Highest Paying Companies is WRONG!

That List of the Highest Paying Companies is WRONG! 20160421.jpg

That List of the Highest Paying Companies is WRONG!

A report from 24/7 Wall St. touting the “25 highest paying companies in America” is being passed around the internet as factual news. Unfortunately, like so many compensation stories, the report is all sizzle and no meat. People love to cheer or complain about pay. The list that was provided makes it easy by using “facts” that are not really “facts”. The report claims that the median total pay at Google is $153,750 and the median base salary is $123,331.

What do I mean by this? 24/7 Wall St. used data from Glassdoor. Glassdoor data is employee-reported. This means it is generally wrong for the following reasons:

  1. Sometimes people do not fully understand their pay. Sometimes they inflate their pay for the purposes of supporting their move to their next job.

  2. It is often missing many of the less obvious elements that make up total rewards. Subtleties such as recognition programs, the cost of health care, paid time off, education support, and more are not part of the data.

  3. Only the employees who self-report are included. There is a bit of herd mentality with this type of data. A couple of people will report and then others in similar positions follow. Other areas of the company don't report at all, which results in skewed data.

  4. The data includes figures by employees of U.S.-based companies with at least 50 salary reports on Glassdoor over the past 12 months. Estimating pay at a company with thousands of employees by using the self-reported data from as few as 50 is a recipe for errors.

  5. The data includes: “annual salary as well as cash bonuses, commission and tips”. So, stock options and other equity compensation, which can be significant at tech firms, are not included.

The list of issues continues, but I think I have made my point. The data from this report is hardly more valid than if you stood in a restaurant in your home town, asked everyone what they were paid, and then created a report stating this was an accurate representation of everyone’s pay in that city.

As founders, executives, HR and compensation professionals, we must be proactive in identifying when pay data is reported incorrectly. In a world where public opinion (not public knowledge) is a major driver of regulations and political policy, any juicy, but wrong data, can work to inhibit our ability to grow and succeed.

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