How to Conduct a Salary Survey: A Step-by-Step Guide for Small Businesses

Quick look: Paying too little risks losing top performers, and paying too much can put unnecessary strain on your budget. A salary survey helps small businesses strike the balance by using current market data to set competitive pay ranges. Here’s how to conduct one, even if you don’t have a dedicated compensation team.

Compensation is one of the most important and challenging decisions small business leaders make. Set salaries too low, and you risk losing top performers to competitors. Set them too high, and labor costs can quickly erode already thin margins. The key to settling on the right figure is benchmarking.

Compensation benchmarking, also called salary surveying, is a structured process for comparing your company’s salaries against what the market demands for similar roles. By grounding pay decisions in reliable data rather than intuition, small or medium-sized business (SMB) leaders and human resources (HR) managers can make better informed decisions during hiring and annual review cycles.

In this guide, we explain what a salary survey is and six steps for conducting one.

What is a salary survey, and why it’s especially important for SMBs

A salary survey is a data-gathering and analysis process that helps employers understand how their current pay stacks up against the broader external job market. Rather than setting salaries based on gut feel or budget availability, benchmarking grounds the decision in tangible statistics.

Replacing an employee can cost anywhere from 50% to 200% of their annual salary, a figure that includes recruiting, onboarding, and decreased productivity. This can significantly eat into any employer’s budget, especially a small business’s.

Compensation benchmarking can help you avoid that situation. According to the Society for Human Resource Management (SHRM), competitive pay is considered very or extremely effective for retaining employees, yet some SMBs delay the process because it feels too complex or time-consuming.

We’re here to help you realize it doesn’t have to be. Here are six steps to guide you through the salary survey process:

Step 1: Define the roles you want to benchmark

Start by identifying which positions you want to analyze. Trying to benchmark every role at once is overwhelming and often unnecessary. First, prioritize:

• High-turnover roles: Positions where you’ve seen recent departures or struggled to fill openings
• Revenue-critical roles: Staff whose work directly impacts business performance
• Hard-to-fill positions: Roles that remain open for extended periods
• Roles you’re actively hiring for: Enabling you to set smart salaries right away

Once you have your list, make sure each role has a clear and current job description. Vague or outdated descriptions will make it harder to match your positions to market data, which can lead to skewed results.

Step 2: Identify your market

Defining your market before you collect data is crucial. Your relevant labor market depends on three factors:

• Geography: Compensation varies significantly by location. Salaries in major metropolitan areas are often substantially higher than those in smaller cities or rural regions.
• Industry: That said, industry-specific data is almost always more useful than general national averages. For instance, 71% of organizations say industry is the most important characteristic in salary data for market pricing. A software engineer at a technology firm, for example, may command a different salary than one working for a nonprofit organization.
• Company size: Salary norms at a 10-person startup and a 500-person regional firm aren’t the same; look for data from similarly sized businesses whenever possible.

Step 3: Gather salary data from reputable sources

Lots of compensation data exists, but not all of it is equally reliable. The most credible sources include:

• The Bureau of Labor Statistics (BLS): This free, government-published wage data is grouped by occupation and region, making it an excellent starting point for common roles and baseline comparisons.
• Professional HR surveys: Firms like Mercer and Willis Towers Watson publish annual salary surveys sourced from employer-reported data. These numbers are notoriously accurate, but access may require a paid subscription or participation agreement.
• Industry associations: Many trade associations publish compensation benchmarks specific to their sector.
• Online salary platforms: Websites like Glassdoor can provide directional insights, especially for smaller businesses without a budget for premium surveys. However, these sources should be used with caution since they are self-reported figures and can vary in accuracy.

Step 4: Align your roles with market data

While searching for comparable data, it’s important to find a role with a similar scope, responsibilities, and required skills, not just the same job title.

For example, at one company, a Marketing Manager might oversee a team of five and manage a $500,000 budget. At another, it could be one person who manages the corporate social media accounts. While both people have the same title, their market values could significantly differ.

When reviewing survey data, focus on:

• Job function and responsibilities
• Level or seniority (individual contributor vs. manager vs. director)
• Required experience, skills, and certifications
• Full-time vs. part-time status

The closer the match, the better the compensation comparison.

Step 5: Analyze the results and set pay ranges

After you’ve gathered and matched your data, it’s time to determine where your pay falls relative to the market.

Standard benchmarking references three points:

• 25th percentile: Below-market pay; appropriate for entry-level hires or roles in lower-cost markets
• 50th percentile (median): The midpoint of market pay; a common target for employers
• 75th percentile: Above-market pay; often used to attract or retain top talent in competitive roles

Most employers aim for the 50th percentile as a baseline, then adjust based on specific roles, internal equity, performance, or business priorities. Once you’ve established a baseline, you can build pay ranges with a minimum, midpoint, and maximum for each role.

Step 6: Review and repeat as needed

A salary survey isn’t a one-time task. Pay expectations fluctuate based on labor market shifts and emerging roles, and what’s considered competitive is always changing. Plan to revisit your compensation benchmarks annually, or any time you’re:

• Adding a new role or department
• Preparing for an annual review cycle
• Navigating a spike in turnover or receiving frequent offer rejections
• Expanding into a new geographic market

Salary surveys are just one part of a strong talent acquisition plan

The right pay gets candidates in the door, but a solid recruiting and talent acquisition strategy is what helps you both find the right people and keep top performers once they’re on board. For small businesses, especially, those two things work best when they’re built together.

How ExtensisHR helps SMBs benchmark compensation

For many SMBs, conducting salary surveys can be time-consuming and difficult without access to specialized tools and compensation expertise.

As a professional employer organization (PEO), ExtensisHR helps businesses make smarter compensation decisions through:

• Compensation benchmarking using current market data
• Salary surveys tailored by industry, geography, and company size
• Guidance on developing salary ranges and pay structures
• Support for annual merit and compensation review cycles
• Recruiting and offer strategy aligned with market conditions
• Ongoing HR consulting to maintain internal equity and pay competitiveness

In addition to these services, ExtensisHR clients gain access to complimentary recruiting services and a dedicated Recruiting Specialist to assist with sourcing candidates, screening resumes, and managing the hiring process so SMBs can fill critical roles more efficiently.