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Although I love to see Escher graphics, I fear that the answer to your question is as distorted as his imaginatively deceptive images. It is CYA. Management committees and other groups with multiple limbs but no brains require defensible excuses for their actions and thus belabor the hapless HR/comp people for THE one metric as guidance.

You are preaching to the choir, here, Chuck, because probably half of my posts pound on that exact same point. Unlike the graphic atop your article, many of those who would advise the leaders of their enterprises exhibit total failures of imagination and ever greater shortages of courage to speak the truth and "tell it as it is." Complexity and lack of simple definition creates challenges not easily overcome by those who lack power and authority.

Great post Chuck. It's also true of merit forecasts. Sometimes there is a lot of difference in what is projected versus what is actual --- one year later.

How can you possibly be wrong if everyone else is doing the same thing...

The psychology of crowds.

Chuck - Well stated. We often characterize salary increase surveys as averages of guesstimates. They work a lot like mutual fund returns -- we can't really tell you what the increase will be but the most likely one will be what we did last year.

Birches Group has a program called Trends™ which calculates a best-fit regression of historical survey data and extends the line as a projection to estimate market movement. It works as well as any of the salary increase surveys available, and it's a lot less work for clients (read: none).


I agree with the thrust of the article and woud never advocate any reported figures to be used as gospel. So many factors to take into account with internal/external relaitivities.
Obviously there are restrictions on reporting forecasts under Anti Trust rules anyway but we are asked by companies to provide an idea if possible. Partly to enable the company to answer questions from the workforce in negotiations. Unions always seem to "know" what's going on.

This is one of the best articles written on the waste of time it is to track midpoints. Thank you, Chuck! Whenever I've seen midpoint data reported in salary surveys, I've ignored it or at most, I've briefly scanned the data out of curiosity, but I've NEVER used it. I would hazard a guess that anyone who actually uses this data in any of their calculations probably doesn't really an understanding of the link between external markets and internal pay practice. I've always considered a pay structure and it's accompanying midpoints and ranges to be a function of company pay policy which is uniquely company specific. We need more common sense to comp management like this article.

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