Salary and benefit benchmarks
Salary and benefit benchmarks compare your organisation’s salaries against the market. This allows you to see how competitive you are. We compare your salaries and benefits with similar types of job in other organisations. We compare like-with-like, taking into account factors such as geographic location, job roles, organisation size and sector.
Many organisations need accurate and up-to-date market information to present to the organisation. This enables them to justify any pay and reward recommendations. We regularly produce reports for this purpose and support HR teams, executives and remuneration committees in managing reward.
A reward benchmark can be a very insightful exercise. But it must be done carefully if it is to have any real value. In our view, this means:
jobs, sectors, location etc must be matched carefully or there are likely to be wide disparities in the data for allegedly comparable roles, which will limit the value of the benchmark. Organisations also vary greatly in their approaches to reward and comparisons can be skewed by certain 'outlier' businesses. The most accurate salary benchmark analyses each role by comparing it against the most closely matched job profile rather than relying on job titles. The same titles can be used for widely differing duties and responsibilities.
the purpose of the benchmark exercise must be clear. Is it to gain a general overview, or to tackle a specific problem – if so, what is it? How long has it been going on? What is the impact on the business? Is the business finding it difficult to recruit and retain people in these jobs? If so, does it think that uncompetitive reward is the principal cause – and what is the evidence?
A benchmark exercise should not be the sole factor in the approach to reward – but it is relevant. Whilst external practice is important in deciding what you should offer, other factors, such as what the organisation can afford, what is necessary to attract the right people and what is practical for you to manage in your culture and business model are likely to be equally, or sometimes more, important in determining pay and reward.
It is critical to use data from a variety of sources including industry surveys, recruitment markets, vacancy information, other public data and our own internal data from comparable organisations. In our experience, data sources should not be restricted to those that are published (whether free or paid for) but should include, if at all possible, information from recruitment activity, which is more reliable evidence of what firms are actually doing.