Where to Find Information About Salaries and How to Evaluate It?

7/30/2024

Anta Praņēviča, Figure Baltic Advisory leading consultant

When thinking about searching for salary information, I still remember a human resources course assignment I completed in 2008 while studying at the Stockholm School of Economics in Riga. The task was to determine the potential salary for a position you would like to have after graduation. At the time, I received a failing grade on this assignment and a lot of confusing comments from the instructor, who had come from the United States. However, I wasn’t the only one who struggled with the task—16 years ago, salary information in Latvia was considered a commercial secret. Employees not only didn’t talk about their salaries, but employment contracts often included a clause prohibiting such discussions. Salaries were not published in job ads, and online tools for sharing salary information didn’t exist yet. Today, in 2024, finding salary information is easier than ever. Managers increasingly have to explain to employees how salaries are determined and refute salary information from various sources. For these reasons, I have compiled a summary of the current information sources available in the market, where salary information can be found and how to evaluate it.

I’ll start with official salary information, which is updated and published monthly in the VID database. This is the largest salary database in Latvia, compiling information on all salaries reported to the VID, and it is updated every month. However, there are some nuances to consider when using this extensive data source. Information on positions is compiled according to the national job classification system, and although this list of positions is very broad, it’s not always an accurate indicator of the specific duties of a position. For example, the position "project manager" can be classified under "IT project manager" (code: 252103) with an average hourly rate of €17.46, "financial product development project manager" (code: 331131) with an average hourly rate of €12.09, "loan project manager" (code: 331202) with an average hourly rate of €13.59, or "cultural project manager" (code: 343523) with an average hourly rate of €7.77. The position "project manager" is not broken down further, and it doesn’t indicate the scope of projects—whether they are small (implementing an accounting program for a company with a turnover of a few hundred thousand) or large (implementing SAP for a global company). The average hourly rate doesn’t answer how much to pay one project manager versus another. Moreover, this system is not immune to the shadow economy and various schemes.

Another example is the position "manager / director / general director / administrator / president/ vice-president / executive director / chairman / manager / general secretary" (code: 112001) with an average hourly rate of €10.64—less than most project managers in the previous example. This indicates that many managers who are also company owners set relatively low salaries for themselves but earn income from profits, which is taxed at a lower rate. To be clear, this isn’t part of the shadow economy—everything is legal, but it doesn’t necessarily reflect the appropriate salary for the specific profession. So, while this is a good source of information, each entry should still be critically evaluated.

Another easily accessible and user-friendly tool is various systems where individuals can share their salaries and see how competitive they are. Currently, there are several such systems, including Algas.lv, Meetfrank, and Glassdoor. These tools are free for employees to use to obtain salary level information for specific positions by simply filling out a short survey about themselves. The more people who fill it out, the more comprehensive the database becomes. What should be considered when using these tools? Definitely whether the classification is accurate and whether identical positions are being compared—even if a position has the same title, such as "HR specialist," the duties and intensity can vary significantly. My observations also show that when filling out data, employees still confuse "gross" and "net" salaries, forget about bonuses and allowances, and often try to rate their position higher (e.g., specialists considering themselves senior specialists). It’s also worth mentioning that there is no way to verify whether the information entered by an employee is actually accurate. Despite this, these tools are useful sources of information for employees to gather inspiration and data to prepare for salary negotiations, keeping in mind that this data serves as guidelines rather than precise evaluations.

My "favourite" source of information is the "word of mouth." This could be a childhood friend, cousin, uncle, the wife of your mother’s friend's son, or anyone else—the main idea is that someone has said how much they or their friend earns in a particular place. It’s interesting information, but unfortunately, this source is the least reliable. Why should such information be taken critically? In these conversations, "gross" and "net" salaries are almost always mixed up, differences in the number of dependents are not considered, and the workload, specific duties, responsibilities, autonomy, scope of collaboration, working hours, and other components are unknown. In such cases, all bonuses, allowances, and other benefits are likely not accurately reflected. Moreover, it’s unclear whether the salary discussed is legal or under the table. And, of course, people’s natural tendency to embellish, dramatize, and exaggerate plays a significant role. These are interesting conversations, but unless someone shows you their pay slip, it’s better to approach these stories sceptically. If you still want to discuss this topic with someone, it’s better to do so with your company’s HR manager or your supervisor, discussing how salaries are determined at your specific workplace.

In 2018, a requirement was introduced to publish salary ranges for specific positions in job ads, and this caused quite a stir. HR managers worried that competitors and employees would now know all the salaries, or that candidates would demand only the upper end of the salary range. The reality, of course, is quite different, and it turned out that listing salaries in job ads is not a bad idea—it immediately helps to understand whether it’s worth applying for a position or not. Currently, job ads clearly indicate the salary a company is willing to pay for a specific position (describing the main duties), but that doesn’t guarantee that the final salary agreed upon will be the same. Although salary ranges are often very broad, during the interview, the company might indicate that the candidate does not fully meet the requirements and offer a lower starting salary, or conversely, if the candidate is very qualified, the salary could be increased. The salary mentioned in the ad might also be inaccurate—it’s often not specified whether the amount is "gross" or "net," what the base salary is, or what bonuses, allowances, or commissions are included. Although job ads list duties and requirements, they can be interpreted differently and may not fully reflect the workload, volume, or work culture. It’s also important to note that job ads only provide information about currently vacant positions. Finally, just because an organization lists a specific salary range in an ad doesn’t mean that all its employees in that position receive the same salary. Today, with a competitive job market, companies often have to list higher salaries in ads to attract candidates. Thus, job ads are a good source of information but, once again, should be critically evaluated.

Another source of information is job interviews, which allow job seekers to understand how much they might be worth as candidates and employers to gauge the salary expectations of potential employees. I admit, when I went to job interviews at companies that didn’t seem attractive to me, I quoted a much higher expected salary than at companies where I genuinely wanted to work. Of course, not all employees make it to job interviews, and not all employers can interview exactly the candidates they want to hire. However, despite the limited amount of information, this is one of the more accurate sources of information.

A precise source of information is also salary surveys—there are three major providers of quality surveys in Latvia: Figure Baltic Advisory, Mercer, and Korn Ferry. What these surveys have in common is that they use a quality job evaluation methodology and a job catalogue to classify all positions analysed in the survey. This ensures that salaries are compared for positions across different companies that are essentially identical—senior accountants with senior accountants, and chief accountants in large organizations with chief accountants in large organizations. The second very important thing is that data for these surveys is provided by companies using a unified data form—avoiding misunderstandings about whether amounts are "gross" or "net" or whether bonuses are included or not. All data is submitted as "gross," with the base salary or hourly rate listed separately, along with bonuses, monthly allowances, annual bonuses, etc. Positions are classified together with HR managers, function managers, or company management, ensuring that positions are placed in the correct categories. Data is submitted for all employees in the company, not just for vacant positions, providing complete information on salaries for all positions. The data is compiled statistically, allowing companies to plan salary budgets and review salaries at an individual level based on these surveys. There are many advantages, but what’s the downside? These surveys are conducted once a year—so a month before the new survey is released, the data is already outdated. Although participation in these surveys is free, detailed analysis must be purchased for a fee. Finally, these surveys are available to companies, but individual employees cannot purchase them. Although some companies openly share survey results with their employees the results are mainly used by manager, HR and finance people.

There is definitely no shortage of information on salaries in our market. This means that we will talk about it more and more, not only with our neighbours, but also with our employees and managers. It is good to know where and what information is available, it is good to understand how reliable it is and how to use it to your advantage. And it is best if we can have an open conversation and trust between manager and employee on this issue.