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Hiring a Compensation Consultant

Topics: Comp Strategy
When Should You Hire a Compensation Consultant? Keeping great employees around can make or break a company’s success. Would you like some personalized help with your compensation planning to attract and retain top talent?

When Should You Hire a Compensation Consultant?

Keeping great employees around can make or break a company’s success. Would you like some personalized help with your compensation planning to attract and retain top talent?

Especially at larger companies without in-house compensation departments, it’s not uncommon for HR folks to bring in a compensation consultant to help them get the best pay packages to their top employees. Consultants can help gather salary data that is up-to-date, put together a proposal and explain their reasoning to management.

But, some smaller companies do not have to money to pay a consultant. Do you feel like you need a compensation consultant to be competitive in your industry but don’t have the funds to afford one?

In this post we’ll explore when it may be necessary to hire a compensation consultant and also some low cost alternatives when you don’t have the money to do so.

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Frugal Alternatives to Hiring Compensation Consultant

Having real-time, accurate, market salary data sets you apart as an employer. Try a demo of PayScale MarketRate and see the benefits of access to salary data on over 7,000 different job titles.

Before you hire out the task of setting ranges, maybe explore some of the other options available to you.

Some providers of salary data may offer assitance in processing it. For example, PayScale is one of the many online resources for pay data. But, PayScale is unique because we not only provide compensation data to companies, but we also help them optimize their use of it. PayScale MarketRate and PayScale Insight both help you keep your compensation information organized, plus PayScale offers an account management and customer service team that is available to help with specific planning needs.

While these services do not replace a compensation consultant, they may provide enough assistance for you to do your company’s compensation planning on your own. And, these products and services often cost a fraction of hiring a consultant.

Other low-cost resources can be books or whitepapers on the topic of compensation planning. One excellent resource I would recommend is a book by Sharon Koss, SPHR, CCP, titled “Solving the Compensation Puzzle.”

How to Decide If You Need a Consultant

To help you decide whether you want to hire an expert or not, here a list of situations in which a consultant might be most helpful:

  1. Limited know-how. Despite your best intentions, you may not have the knowledge needed to do your company’s compensation planning, or the time to learn it. You can solve this problem a couple of ways. First, you could use an online service or HR software to help you. For example, PayScale and other companies offer products that are specially designed to help people create a compensation program for the first time. But, that approach takes time and there will be some learning involved. To get past gaps in knowledge more quickly, you may be wise to hire a consultant who knows your industry.
  2. Need a heavy-hitter. When you hire a consultant, you get more than their knowledge. You get their influence as an outside expert. For example, a consultant may be able to say things to your executive team that you feel uncomfortable saying. After all, who wants to tell the CFO that they are over paid? This is a touchy topic for an internal person to address, but easier for an external person to say. Sometimes you know exactly what needs to be done, but it can be easier to have an outside party deliver the message.
  3. Cost savings. In some instances, it may be cost-effective to hire a consultant – especially in the short term. Smaller companies may find that it’s cheaper to hire a consultant than to purchase multiple salary sources. If the consultant already has access to market data, then this might be the less expensive way to go for immediate needs. But, companies need to be careful to look at both short-term costs and long-term costs. After all, once the compensation project is done in year one, you’ll need some sort of schedule in place to keep the plan updated year after year. It could get expensive in the long-run to hire the consultant every year.

If you review your situation and decide that hiring an external compensation consultant is the right direction for your company, here are a few tips to make the process go smoothly:

  1. Stay involved. As the HR leader at your organization, you will want to partner closely with your compensation consultant. Help them get up to speed with the history of the organization, your current compensation plan, and the key players in the organization. You’ll want to provide an orientation for your consultant in a similar way to training a new hire but with a very targeted objective.
  2. Help out. Find out if there is some legwork that you can do. There may be parts of the project that you can assist with that will be easier for you to do than the consultant. This might include utilizing the job evaluation tool to slot jobs in pay grades or matching jobs to survey data. If the consultant is willing to let you do some of work, you may be able to save money.
  3. Plan ahead. Create a proposal and a plan for maintaining the program in-house or with more limited consultant involvement in the years to follow the initial launch. The last thing you want is to create a program that you can’t maintain year after year.


Stacey Carroll
Director of Customer Service and Education, PayScale, Inc.

Do you have any salary range topics you would like to see covered here on Compensation Today? Write us a

Are you doing a salary review or compensation benchmarking project? PayScale provides up-to-date, external salary market data you can use right now. And, it is specific to the education, skills set and experience your employees. Give a PayScale demo a try.

Stacey Carroll
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Cheryl Smith
Cheryl Smith

I like the tip about asking if there is some of the legwork that I can do. I like to stay involved and help with decisions. Hopefully, our company can choose the right consultant that will help us the best.

Millie Hue
Millie Hue

Thanks for helping me understand that it will be best to hire a consultant to help you so that you will be able to understand that issue or the things quickly. I will share this tip with a friend of mine to help her out when she already has a business of her own. She might need this since her dream business is a salon which means that she will hire people to work for her, so the right salary computation must be done to save her from lawsuits.

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