When salary survey data is aggregated to produce market statistics, there are two fundamentally different ways to calculate averages: firm-weighted and incumbent-weighted. The choice between them is not a technical detail — it can materially change the resulting figures, and using the wrong one for a given purpose produces benchmarking conclusions that are systematically misleading.
Vencon Research presents both firm-weighted and incumbent-weighted data in its Consultant Salary Survey reports, with a dedicated video tutorial explaining the difference. Understanding which to use in which context is one of the most practically important skills in reading and applying salary survey data.
Firm-weighted Data
In a firm-weighted calculation, each participating firm contributes equally to the market average, regardless of how many consultants it employs at the relevant career level. A boutique firm with two Managers and a large firm with two hundred Managers each count once.
Firm-weighted data answers the question: what does the typical firm in this market pay? It is most useful when the question of interest is competitive positioning relative to peer firms — for example, whether a firm's pay is above or below the median firm in its competitor set. Because each firm has equal weight, the result is not dominated by the pay practices of the largest employers.
Firm-weighted data is generally the more appropriate basis for most strategic compensation decisions: offer benchmarking, salary structure design, and positioning assessments. It reflects what firms are doing, not how many people happen to work at each pay level.
Incumbent-weighted Data
In an incumbent-weighted calculation, each individual consultant in the survey dataset contributes equally to the market average. A firm with two hundred Managers therefore has one hundred times the influence on the result of a firm with two Managers.
Incumbent-weighted data answers the question: what does the typical consultant in this market earn? It is most useful for understanding the overall distribution of pay across the population — for example, for workforce cost modelling, or for assessing what the average person at a given level in the market actually earns rather than what the average firm pays.
Because large firms dominate incumbent-weighted averages, this measure is heavily influenced by the pay practices of major employers. In markets where a small number of large firms account for the majority of consulting headcount, incumbent-weighted and firm-weighted results can diverge significantly.
Which to Use When
- Use firm-weighted when assessing where your firm sits relative to competitor firms — for offer benchmarking, pay structure calibration, positioning reviews and most HR decision-making contexts. This is the more common default for compensation management purposes.
- Use incumbent-weighted when modelling what the consultant population as a whole earns — for workforce cost forecasting, labour market analysis, or understanding the distribution of pay across a market rather than across firms.
- Compare both when trying to understand whether large firms are driving the market up or down. If incumbent-weighted averages are materially higher than firm-weighted averages, large firms are paying above the typical firm; if lower, large firms are paying below the typical firm.
Vencon Research recommends firm-weighted data as the primary reference for most consulting HR applications, with incumbent-weighted data used as a supplementary lens for specific analytical purposes. The difference between the two is explained in detail in the video tutorials available to survey clients.
The Weighted Mean
A related concept is the weighted mean — a variant of the arithmetic average that weights each data point by the number of incumbents at that sub-level, rather than treating each sub-level equally. This is particularly relevant when aggregating across career sub-levels, where the number of people at each sub-level varies significantly. See Survey Statistics for a full explanation of the statistical measures used in salary survey reports.