Salary benchmarking is no doubt a term you’ve come across, especially if you work in HR.
But remember, you’ll hear "salary benchmarking" and "compensation benchmarking" in use across businesses—these terms mean the same thing, so there’s no need for any confusion there.
And you may be familiar with the concept, but what does it involve? In this guide, we explain all the essential details.
What is compensation benchmarking?
It gathers information on 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.
What are the benefits of benchmarking?
The idea is to compare the pay and benefits on offer against your industry. The process prevents the loss of employees to rivals with better salaries or perks.
It also allows you to see how competitive you are within your marketplace. Some of the other main benefits include:
- Allowing you to get an idea of the differences between sectors.
- Discovering the pay levels typical to your industry.
- Informing your decisions with an accurate reflection of pay packages.
- Determining the overall mean, lower, and upper quartiles of pay packages.
- Comparing your pay rates with rivals and the wider market.
Why is benchmarking important?
It's essential as, when done properly, it can improve employee retention.
While having a good staff turnover rate isn’t all about money, it certainly plays a big part—the largest, in many cases.
If you’re paying your top talent below the market standard, it shouldn’t come as a shock when they announce they’ve found employment elsewhere.
It will also work wonders for recruitment, and do a lot of good for your company image.
Today, job seekers are very aware of their worth, which means providing a competitive salary is vital to obtain top talent in your workplace.
With the right tactics, you can win skilled new staff members by, for example, offering above the industry norm.
How to perform compensation benchmarking and set salary ranges
If you’re looking to benchmark your roles, you’ll need access to a reputable salary survey.
Luckily, Croner has just that, contact our reward department for access.
And, if you’re not sure what you’re looking at, we have advisors waiting on the other end of the phone to assist you.
Once you have access to our salary survey you can begin searching for the roles you wish to benchmark.
If you need to adjust pay for any of your roles, ensure your payroll make the necessary changes, and update any record on recruitment channels.
Want access to our salary surveys?
Speak to one of our Croner reward benchmarking experts on 01455 858 132.