If you work in HR, you would no doubt have heard about salary benchmarking. But what exactly is it? More importantly, why should your business have a salary benchmarking process?
In this article, we are going to cover what salary benchmarking is and how you can utilize it within your business.
What is salary benchmarking?
The salary benchmarking process evaluates and compares an organisations pay and reward packages for its staff. Information is gathered on pay and benefits from various organisations and lets you see what the average industry wage standards are for your sector. The subsequent report then goes on to compare the pay packages on offer in your business against those offered for the same role by competitors.
This information is then used to calculate the average salary for specific roles within an organisation typically in the form of a quartile pay range. Salary benchmarking is an important part of managing a business with employees to ensure your staff are in the correct salary range and paid correctly for the job they’re doing. The report can then be used by your business to identify job market trends, collect data, track set salary ranges and compare similar salary rates to determine the pay package for your employees.
In terms of HR, it’s essential to compare your pay and benefits on offer against those offered by competitors, using a like for like approach. The process prevents the loss of employees to competitors with better packages. It also allows businesses like yours to see market salary rates so that you can set up a competitive pay structure.
What is compensation benchmarking?
Compensation surveys gather information on the average pay and benefits for various organisations. After that, it compares the pay package on offer against those offered for the same role by your rivals.
This information is in use to calculate the average salary for specific roles within an organisation.
As a result, it’s an important part of managing a business.
The process ensures that, as a business, you can identify, track and compare similar salary rates to determine the pay package for your workforce.
Why do businesses need salary benchmarking?
Recruitment and retention of course! Most employers don’t want to risk losing your top executives to better offers and pay packages from competitors. The process offers employers like you a chance to show the value of your employees. It will also keep stakeholders up-to-date with the latest salary trends in their industry.
It gives you a competitive advantage in recruitment and retention.
Helps set salary ranges or grades, making it easier to attract skilled professionals who are comparing job offers.
Ensures compensation packages are fair and equitable. Reducing the risk of pay disparities leading to employee dissatisfaction and legal issues.
Gender pay and equal pay.
Cost control. Having effective benchmarking process maintains cost control without sacrificing operational efficiency.
Aids compliance with labor laws and regulations.
How to do salary benchmarking
Salary benchmarking involves research to gather data from outsourced benchmarking tools and data sources. Results are listed according to location, experience levels and more.
You'll find information on salary benchmarking and simple tools to collect salary data on recruitment sites. Some recruitment companies can have access to salary information from hundreds of employers.
Salary benchmarking tools
There are lots of salary benchmarking tools available online for businesses to attract and retain employees. For generic information on pay, according to location and industry, check recruitment sites like Hays, Hudson, and Total Jobs.
For a more detailed report consider hiring expert salary benchmarking professionals. Croner offers two essential software tools designed to simplify the salary benchmarking process.
They base their reports on data from over 4,000 employers and over 50,000 jobs all around the UK. You would receive a detailed and customised report specific to your company and compared to your competitors.
Benefits of salary benchmarking
Salary benchmarking allows recruiters and employers to better understand the competitive job market. It helps to track changing trends in salaries, benefits and compensation within industries. Some other benefits of include:
Improved retention rate:
A major issue facing organisations today is employee retention. With higher rates of employee turnover harming productivity within businesses, investing in the right salary and benefits package for employees has never been more important. Offering competitive benefits packages can increase employee motivation and retention within the company making it harder for staff to poach. A Compensation package includes salaries, bonuses, paid time off, pension plans and more.
Unique Selling Point for potential employees
Up-to-date salary benchmarking reports help your organisation stand out from the competition. The process of conducting salary benchmarking allows you to offer fair and competitive salaries to your employees which can act as the USP for your company.
Identifies room for improvement
Salary benchmarking allows comparison between your pay and benefits package alongside your competitors. It offers you the chance to adapt your salary ranges and offer, according to market demand and current trends. These reports identify areas where competition might be outperforming your organisation and vice-versa.
Croner Reward has two essential software solutions that are compatible with one another. We designed the tools to simplify the job evaluation and the process. Speak to our experienced professionals about insights into job descriptions and up-to-date salary benchmarking reporting.
Find more information regarding our salary surveys and salary benchmarking tools. You can also check out Croner Reward online tools for salary search explaining the essential information that employers need for a detailed report.
For advice on how to close the pay gap or for any other pay & benefits issue, speak with one of our pay and benefits experts on 0800 141 3900.
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