What is salary benchmarking?
Salary benchmarking is a data-gathering exercise that allows you to compare your compensation packages against other companies.
What’s the goal of salary benchmarking?
To ensure that your company is offering competitive and equal pay – helping you to attract and retain your people and keep them engaged and happy.
What are the benefits of salary benchmarking?
• Competitive salaries help to attract top talent and reduce employee turnover.
• Fair and competitive compensation can lead to higher job satisfaction and employee morale.
• Standardising compensation can help you to manage your budgets more effectively.
• Salary benchmarking is often a legal requirement.
Are you legally required to benchmark your salaries?
If you have more than 250 employees, you are legally required to publish gender pay gap reports under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.
There is no legal requirement if you have less than 250 employees.
However, several laws and regulations effectively encourage or necessitate aspects of salary benchmarking to ensure compliance and promote fair pay practices.
As an expert HR consultant, we advise you to use salary benchmarking, because it helps you in many different ways and creates a framework for you to use when compensating your existing and future employees.
The importance of treating employees fairly for engagement…
As an HR professional, you know that treating people fairly and equitably is one of the foundation stones of engagement.
You’ll also know that if you don’t reward people adequately, they will find somewhere else that will.
We remain in a candidate-driven market and our businesses are trying to balance the cost of living (which is outside of our control) with the affordability and retention of talent.
Worried about salary transparency?
You might fear a wave of salary increase requests once employees see their pay ranges. While managing this will require some effort, it offers long-term benefits.
Engaging managers in the pay process, and giving them authority to recruit within pay scales, can empower them and improve their budget management and performance discussions.
Senior leaders may resist this shift, but younger workers expect transparency and fairness.
Companies that don’t adapt risk falling behind the evolving workforce’s expectations.
Getting salary benchmarking right is really important…
Pay is an important topic, especially when you’re taking strategic strides and implementing new policies.
Therefore, if you are not equipped with the experience to undertake the project, you’ll be wise to call upon expert help to support you.
To summarise…
In summary, progressive employers are more attractive, and being progressive and appealing to an emerging workforce means being transparent about how you do things and make your decisions.
Engaging with a third-party reward consultant can offer an unbiased view, access to expensive but reliable data and the confidence to structure a meaningful remuneration strategy that ensures that your people (including you) are treated fairly.
Contact us today
Please get in touch if you’d like a confidential chat about salary benchmarking, our process and how we can help.