You’ve probably seen it in a job ad or heard it from a recruiter:
“We offer competitive compensation based on market standards.”
Sounds great. Except… who decides what’s “competitive”?
And where is this market data actually coming from?
Here’s HR’s dirty little secret: most so-called “market rates” are built on flawed, outdated, or entirely made-up data. And it's costing you the talent you're trying to attract—and keep.
The Source Problem: Garbage In, Garbage Out
Many companies base their pay structures on self-reported salary surveys or aggregated data from vendors who often won't reveal their sources.
Some problems with that:
The data is several months (or years) old
It’s skewed by geography or industry
It often includes outlier salaries from massive corporations
It’s based on broad role titles like “Marketing Manager” or “Software Engineer,” without nuance for responsibilities or scope
What you get isn’t a “market rate”—it’s a Frankenstein average that may not resemble reality at all.
The Illusion of Objectivity
HR teams present salary bands as if they’re data-driven and fair. But in reality, many of those bands are created with plenty of wiggle room to keep costs low.
Worse, they’re used to justify underpaying existing employees:
“We can’t give you that raise—it’s above market for your role.”
But if the market data is flawed, who are we kidding?
It Gets Even Shadier
Some companies manipulate the benchmarks themselves:
Cherry-picking lower-paying data sets to keep budgets down
Using broad, misleading job matches to suppress salary bands
Creating “market ranges” wide enough to justify nearly any offer
If an employee asks for a raise, HR can simply point to a conveniently low midpoint and say, “You’re already above average.”
It’s not about fairness. It’s about controlling the narrative.
Who Loses?
Employees who are told to be grateful for “competitive” salaries that are anything but
Candidates who accept lower offers, thinking they reflect reality
Companies that can’t retain talent because people talk—and learn they’re being underpaid
HR pros who are forced to defend a system they know is broken
What You Should Be Doing Instead
✅ Benchmark with transparency
Share the sources. Break down how roles were matched. Explain the variables.
✅ Use real-time, internal data
Your best benchmark is what you’re already paying—adjusted for performance, tenure, and contribution.
✅ Audit for equity
Regularly check for gaps by gender, race, and tenure. If you're paying people wildly different amounts for similar work, fix it.
✅ Embrace salary transparency
Don’t just say you pay fairly—prove it. Publish ranges. Explain your compensation philosophy. Show employees how pay decisions are made.
Final Word
If your salary strategy is built on bad data, you're not being competitive—you’re just pretending.
In a world where candidates can crowdsource offers and employees compare notes in group chats, the truth will come out. The only question is whether your HR team will lead with honesty—or keep hiding behind spreadsheets.
Want compensation structures employees can actually trust?
Talk to SapientHR—we’ll help you rebuild your pay strategy on transparency, equity, and real data.
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