What is salary benchmarking?

Salary benchmarking is a data-gathering exercise that allows you to compare your internal job salaries against the external market.

What’s the goal of salary benchmarking?

To ensure that your company is offering competitive and fair pay – helping you to attract and retain your people, keeping them engaged and happy.

What are the benefits of salary benchmarking?

• Competitive salaries help to attract top talent and reduce employee turnover.
  Fair and competitive compensation can lead to higher job satisfaction and employee morale.
  Standardizing compensation can help you to manage your budgets more effectively.

Are you legally required to benchmark your salaries?

There is currently no legal requirement for salary benchmarking in the United States, but it is a common practice that helps to ensure competitive and fair pay. Aligning compensation with the market also helps to attract and retain top talent and can be used during internal pay equity reviews.

As an expert HR consultant, we advise you to use salary benchmarking because it helps you in many different ways and creates a framework for you to use when compensating your existing and future employees.

The importance of treating employees fairly for engagement…

As an HR professional, you know that treating people fairly and equitably is a foundation stone of engagement.

You’ll also know that if you don’t reward people adequately, they will find somewhere else that will.

We remain in a candidate-driven market and our businesses are trying to balance the cost of living (which is outside of our control) with the affordability and retention of talent.

Worried about salary transparency?

You might fear a wave of salary increase requests if employees are aware of their pay ranges. While managing this will require some effort, it offers long-term benefits.

While there are currently no U.S. federal regulations requiring salary transparency, many states have adopted pay transparency legislation and that trend seems to be increasing.

Engaging managers in the pay process, and giving them authority to recruit within pay scales, can empower them and improve their budget management and performance discussions.

Senior leaders may resist this shift, but many younger workers expect transparency and fairness. Companies that don’t adapt risk falling behind the evolving workforce’s expectations.

Getting salary benchmarking right is really important…

Pay is an important topic, especially when you’re taking strategic strides and implementing new policies.

Therefore, if you are not equipped with the experience to undertake the project, you’ll be wise to call upon expert help to support you.

To summarize…

In summary, forward-thinking employers – which includes being transparent about how you do things and make your decisions – are more attractive and appealing to an emerging workforce.

Engaging with a third-party compensation consultant can offer an unbiased view, access to expensive but reliable data and the confidence to structure a meaningful compensation strategy that ensures that your people (including you) are treated fairly.

Contact us today

Please get in touch if you’d like a confidential discussion about salary benchmarking, our process and how we can help.