Rethinking Survey Comparators – Your Sector Is Not An Island

Rethinking Survey Comparators – Your Sector Is Not An Island

One of the most important steps in deciding on a salary survey is identifying which other employers are included as participants, and their relevance for your company.  Conventional wisdom would dictate that you should look primarily at other companies in your sector.  In fact, many survey companies have built their businesses over the years exclusively with this approach.

Do sector-based approaches work in developing countries? At Birches Group, we would suggest, in the majority of cases, the answer is NO!

Here’s why:

  • Individual sectors are not large enough.
  • Data stratification – there are big gaps between the best and the rest.
  • Your sector is not an island – you compete with all sectors in the market.

Let’s examine each of these reasons in more detail.

Sectors are too small

In developed markets such as North America and Western Europe, sector specific data is common.  It is also true that there are large numbers of companies in each sector, so the chances of getting access to a survey for your sector with at least 15 companies is fairly high.

However, in developing markets, a sector-based sample could fall short.  First of all, there are fewer comparators operating in these markets.  Instead of 15, you may be able to access only 6 or 8 companies.

And it’s not just the number of companies, but the scope of their operations, too. One may have full operations and another might consist of just a small sales office. If your company has full operations, comparing to small sales operations isn’t too useful.  This is a case where revenue data is not too helpful, but number of employees might be useful.

Data stratification

In developing markets, the gap between “the best” and “the rest” is very large.  Most prominent employers want to compete with the best, but their sector-only survey is missing a big piece of that market, because it includes many smaller companies, perhaps local ones, which may not be competitive with multi-nationals.

Multi-sector approaches work better

We are strong advocates of a multi-sector approach to surveys. In highly stratified markets, “the best” employers will likely be a few from each sector. So a good multi-sector sample of the best employers from each important sector in the market yields a market profile which has tremendous relevance for dynamic employers.

Which sectors should be used?

So which are the “important” sectors?  In developing markets, there typically are representatives from:

  • Retail Banking;
  • Fast-moving Consumer Goods (FMCG) such as soap, toothpaste, tobacco, food and beverages;
  • Natural Resources such as oil, gas and mining (if present in country); and
  • Technology and Mobile Telecom.

Other important sectors found in some markets include engineering and construction, pharmaceuticals, agri-business, logistics, and more.

What about the International Public Sector?

In addition to all of the sectors mentioned above, another very important sector in developing markets is the international public sector. This sector includes three different kinds of employers:

  • Multilateral organizations such as the United Nations, World Bank, regional development banks, European Commission, and many others.
  • Bi-laterals, including diplomatic missions and development aid organizations from a single country with representation in the subject country
  • International NGOs, which work implementing programs to improve the quality of life and address the toughest humanitarian, health, human rights and environmental issues facing the world today.

One of the best reasons to look for international public sector organizations in your survey group is because they have been operating in developing markets for a very long time. In fact, these organizations are often the first ones to enter a country following volatile events such as political collapse or civil war, assisting with rebuilding civil society and helping to ensure that when private companies operate or expand their operations, that everything works the way it is supposed to work.

As an example, the US Embassy has operations in 144 of the 148 countries where Birches Group conducts surveys. Our largest NGO clients operate across 60 to 70 developing markets.  The International Committee of the Red Cross is in over 90 Birches Group markets.  Few private sector companies have such a large footprint in developing markets (if yours is one of them, we should talk!).

Still, many clients ask us why the international public sector is relevant. They don’t see any connections between economists, aid workers and diplomatic services as compared to infrastructure engineers, brand managers and banking staff.

Here are five more examples to consider:

  1. ALL employers hire people in the areas of administration, finance, procurement, human resources, support and clerical roles, and less-skilled positions such as guards, drivers and messengers. It doesn’t matter much which sector your company is part of, you are competing with all of them — including the international public sector.
  1. For key professional roles at all levels, private sector firms target the best qualified workers. So do international public sector organizations!  They are competing with the rest of the market, just like your company.
  1. Each company has unique professional roles that often are distinct for the business and usually sector-specific. Think brand managers from FMCG companies, loan officers in banking, telecom engineers in the mobile phone industry, etc.  Remember these roles can be compared easily using a level-based approach to other jobs of equivalent value from across all sectors.  And if you use the Market Footprint approach to analyze the data, occupational differences driven by market conditions like hot skills can be easily addressed, too.
  1. International public sector employers have strong employer brands, pay well, and offer some unique opportunities, such as programs with important missions, opportunities for overseas assignments, and even the possibility of citizenship in some cases. In many countries, they are prestigious employers and landing a position is considered an exceptional achievement.
  1. Talent in developing countries moves between sectors, public and private, frequently. Cross-sectoral competition for talent is fierce, and those that ignore it do so at their own peril.

In Summary

We recommend a multi-sector survey approach in developing markets.  In those countries where sector data is also available, it can be useful to look at sector cuts, too. By looking at the overall market data together with sector data, you get the added understanding of how the sector relates to the overall market.  Using a survey which includes international public sector employers ensures that these key players are represented in your market profile.

It’s time to rethink how survey comparators are chosen, and how unreliable, sector-specific data is used, often without the benefit of a broader market context.  We will share more ideas in future installments of this series.

Other Articles in this Series

Do Jobs Really Matter in Salary Surveys

Salary Survey Percentiles Exposed!

posted on January 11, 2016 / Blog, Featured