For companies to compete for talent, they need to be aware of what the market is paying for certain skills and then develop reasonable salary ranges within their organisation.
Salary benchmarking can be time consuming and costly but it is necessary to improve an organisation’s ability to attract talent and motivate and retain existing employees. Some companies have remuneration departments to assist with benchmarking and they often have access to salary surveys.
If your organisation is paying for a salary survey or considering a survey, look out for the following:
Participants – the companies compared in the survey should be from a similar industry, company size and location to yours.
Data – look for similar job titles and compare the responsibilities. The data must be current and valid (look for dates and ensure that the sample data is large enough).
If your company does not have access to a remuneration department, would like to benchmark a few roles or has a unique role which is difficult to compare in the market, follow these basic steps to create your own benchmark:
Establish a compensation / remuneration policy.
Collect market data – review job descriptions (look at the job responsibilities and not just the job title; responsibilities must be similar to be comparable), consider geographical area, size of the organisation and education level.
Work with the payroll budget and set a salary range.
Position your salaries relative to competitors and decide where your company wants to pay in relation to market rate.
