One of the metrics that really matters when it comes to leading a team is salary and cost data. That’s why we’re launching salary benchmarking and metric costs in our HR analytics platform.
Let’s cover the basics first…
What is salary benchmarking?
A salary benchmark is something to compare an internal salary against, to see if you’re meeting the market rate. It’s often based on several external sources – factoring in geography, industry, job role, and seniority to make sure it’s completely relevant.
Why benchmark salary?
- 74% of employees say pay transparency matters, and salary benchmarking means you can be comfortable about not hiding your pay scale
- It helps you set realistic budgets when hiring new staff (and be confident about advertising those salary ranges too)
- If you know you can’t meet the benchmark, you know you need to offer other types of compensation – like extra perks or flexibility
How does salary benchmarking work?
As with any data analysis project, salary benchmarking isn’t always easy. Anything involving multiple sources of data, different variables, and such sensitive information is bound to be complex. So if you want to do salary benchmarking, you need a process.
Here’s a few steps people usually take:
- Collect data about salaries: there’s lots of ways to do this, from acquiring a database to manually trawling through the internet. Decide what works best for you, and consider the need for accuracy in this step
- Think about job titles: HR Director vs Chief Happiness Officer? It’s a cliché, but job titles can differ – so you need to understand job function and job seniority, so things don’t get too confusing down the line
- Factor in size & industry: a start-up and a multinational company aren’t going to pay the same wages, obviously. And charities will pay less than the finance sector – so you need to factor all this in
- Find the salary range: once you’ve got all the data, and factored every variable in, you can understand the total salary range of the role you’re benchmarking – from the lowest paid to the highest
- See where you sit: now it’s time to look within – measure where your current salaries sit on that sliding scale, to understand if you’re meeting market rate, exceeding it, or falling far below it
A word of warning…
Don’t underestimate the importance of data being accurate, relevant, and up-to-date. Without this at the heart of your benchmarking exercise, it’s all going to fall apart.
Benchmarking salaries with Compensation IQ
There’s several ways you can approach a salary benchmarking exercise – but most of them involve manual work, a lot of time, unreliable data, and a whole heap of stress. For those reasons, your best bet is using a salary benchmarking tool that does the bulk of the work for you.
Our platform offers dynamic, spreadsheet-free, automatic salary benchmarking. Here’s the salary features you can expect to see:
- Salary benchmarks dynamically mapped to your organisation’s roles
- In-app visualisations of your pay vs. benchmark, separated by role
- Comparison of total salary costs by function, teams, & other demographics
- Automatic calculation and tracking of absence and attrition costs
- Monthly data updates reflecting trends or changes in market pricing
With global salary data from over 1 million companies, and 100+ million job titles, you’ll be able to make pay decisions quickly and easily. That’s a lot of time saved! Find out more…
