If you’ve been following our blog, you’ll have learnt what salary benchmarking is and why benchmarking salary is a worthwhile exercise. That’s all well and good, but how do you actually go about it? You’ve got options – but some are better than others.
In our opinion, salary benchmarking tools are your best bet. Read on to understand what’s so difficult about a manual salary benchmarking exercise, and what tools are out there.
Why use a salary benchmarking tool
1. Salary benchmarking takes time and effort
Any kind of data analysis takes hours of skilled labour. But salary benchmarking is particularly tricky – as it involves collecting reams of pay information; factoring in job titles, industry and geography; making sure it’s all up-to-date and accurate; and making complex comparisons to your own workforce.
Needless to say, all of that takes time, resources, and energy – something that people leaders don’t always have in supply.
2. Outdated or inaccurate data is a concern
We touched on it, but this is a biggie: there are a lot of ways to get your hands on salary data, if you’re willing to A) do some manual trawling, or B) pay for a report. But in either case, there are risks. Reports become outdated quickly as the working world changes, and online sources (often self-reported, for one) aren’t always trustworthy.
You can’t tile your bathroom with cardboard (we think?!). You can’t do a salary benchmarking exercise with bad data. It’s just the way it is
3. Confidentiality and compliance must be maintained
We’ve all heard about the HR manager accidentally misplacing a printout of the organisation’s salary, and getting fired for their mistake. That’s because salary is a sensitive subject, and it can cause your organisation all kinds of trouble if you don’t respect that.
Handling sensitive data manually, understanding access permissions, and making sure you maintain legal requirements like GDPR – it’s not easy.
4. You need data from relevant industries
Some companies will fall neatly into an industry category. The legal sector. Agriculture. Non-profit. But that’s not always the case – and that’s where it gets complicated, in terms of making sure the benchmarks you’re looking at are actually relevant.
That’s not-to-mention collecting data from all those industries too. That’s a lot of numbers to handle, analyse, and interpret manually. Trust us. And that’s if the data is even out there for you to find.
5. It’s hard to find equivalent job roles
There’s a lot of variables when it comes to comparing job roles. Seniority, industry, skill-level, tenure, performance – the list goes on. Finding an accurate benchmark for a specific job role can be incredibly difficult, especially since job titles aren’t standardised. Head of Happiness, anyone?!
This relates back to point #2. It’s a slippery slope, when you start turning a blind eye to not-totally-relevant-or-accurate data. Sooner than you think, the whole exercise becomes redundant. Or worse: actively misleading and harmful.
6. Things keep changing – it’s hard to keep up!
It’s like mowing the grass. It’s time-intensive and, soon enough, you need to do it all over again. Salary benchmarking isn’t a one-off exercise. The market changes, societal shifts happen, and industry updates all impact the salaries being paid.
So even if you do take the time to do all that manual analysis, there’s bad news: you need to do it again. And again, and again, and again. We’ve made our point…
Salary benchmarking tools: what’s out there?
If you’re looking for help when it comes to salary benchmarking, there’s a lot of options out there. Here’s a few of them:
- PayScale: As a ‘compensation platform’, PayScale focuses on giving you access to dynamic compensation data, and technology to help you make fair pay decisions. It’s all about getting pay right, compared to market rates.
- Mercer: Known for their compensation research and insights, Mercer offers reports on pay and benefits – which you can then use as a trustworthy source to back up your manual analysis.
- Compensation IQ: We do things a little differently. We offer salary benchmarking and metrics, as part of our wider people analytics platform, and factor in cost analysis to all of this too. Because salary doesn’t exist in a vacuum – it can be linked to metrics like attrition and absence, too.
Want to benchmark salary? Choose Compensation IQ
Salary benchmarking is one part of our HR analytics platform – and we’re offering it to help people leaders really understand how to drive organisational success. Sign up for all of the following, and much more:
- Global salary data, from over 100 million job roles
- Benchmarks mapped dynamically to your teams
- Automatic cost calculation of absence & attrition
- Compare salaries by team, role, and demographic
