If you’re a HR professional, you likely heard of salary benchmarking and how it can help a business. For everyone else though, what exactly is salary benchmarking? And how can this help my business?
In this guide, we’re going to cover what salary benchmarking is, and how you can implement this successfully into your own business.
What is salary Benchmarking?
Salary benchmarking is the process that evaluates and compares salaries and benefits packages from several different organisations. With this information, you can then compare it with your organisation, and start to implement a strategy to attract top talent and retain the staff you already have.
The first thing that you will find in your report is data on pay. You will be presented with the industry standard wage for your sector. The two main influences on the average industry wage are:
The discipline you are hiring for.
Whilst some sectors and industries have their own average wage, the job role that you are hiring for within that also plays a big part in the average salary. For example, a junior marketing executive in the scientific equipment sector will have a different average salary than an operations director in the same sector.
The geographical location of the role
It’s a well-known fact that the cost of living varies from region to region, so wages have to reflect that. For example, the average wage for a marketing executive in Manchester will be lower than that of an executive from London.
You must consider these two aspects when you are conducting your salary benchmarking research so that you are left with accurate data you can build on.
What other information do I get?
The next part of the report will compare the pay packages and benefits on offer in your business against your competitors. This is key information to have if you want to get ahead of the competition when looking to hire the perfect team members.
All of this information is then used to calculate the average salary and benefits package for specific roles and industries.
As well as wanting to attract the top talent to your new vacancy, salary benchmarking is an important part of managing your current business and team. It allows you to look at the salaries you currently offer and ensure that you are not undervaluing your employees. From this data, you can then easily craft a package that makes everyone happy and blows your competitors out of the water.
Why do businesses need salary benchmarking?
The answer is simple, for recruitment and retention!
For most employers, losing a member of the team for a competitor with a better salary and benefits package is disappointing, and something they don’t want to risk. This process gives you clear, precise data that allows you to make informed and accurate decisions on how to structure your pay package, and helps you avoid a trial-and-error approach which can ultimately lose valuable team members.
It’s also a great way for organisations to be aware of current marketing and economic trends within their industry.
Here are the top ways that salary benchmarking can help you and your organisation:
- Gain an advantage over your competitors
- Set salary ranges that are competitive but reflective of the candidate’s skill set.
- Makes sure that compensation packages are fair, keeping future and current employees happy in their roles.
- Allows you to evaluate and gender pay gaps to become an equal opportunity employer.
- It’s cost-effective. Having a regular salary benchmarking report can reduce staff turnover, minimising hiring and operational costs.
- Make sure that you are compliant with employment laws and regulations.
So how do I do a salary benchmarking report?
The process of salary benchmarking involves a lot of research, so make sure you have the right member of the team who can dedicate a lot of time to the project.
It involves gathering data from a lot of different organisations, using benchmarking tools and data sources. Your results should be listed by location, experience and more.
What are salary benchmarking tools?
There will be some basic information and tools for salary benchmarking on most recruitment websites. The big websites such as indeed.com and Hays offer generic salary benchmarking insights, which can be used as a basis to form your own report. Here at Mase, we have conducted some basic salary benchmarking reports in the sectors we recruit in. If you would like a copy of any of these, head over to our salary benchmarking page.
How do I get a more in-depth report for my business?
If you’re looking for more in-depth data that is unique to your organisation and sector, consider partnering with a recruiter. They have extensive knowledge and data from thousands of businesses. Partnering with an agency (like Mase) can take the stress and hard work off your shoulders, resulting in a detailed, professional report.
Here at Mase, we have access to data for a lot of niche industries from Scientific Equipment to Aerospace and Defence. As most recruiters shy away from these industries, our data would be a great advantage for your salary benchmarking report. We can also tailor our approach to be in line with what you want to achieve with the process, whether that is looking at the data of your direct competitors, or data from similar businesses across the UK and Europe.
We pride ourselves on delivering high-quality reports to our clients that help build an unparalleled strategy for recruitment and retention. If you would like a quick chat to see if we would be the right fit for you, you can contact us here or give the office a call on 01942 725479.
Benefits of salary benchmarking
So now you know more about what salary benchmarking actually is, you might be wondering what the benefits are, and if it’s worth implementing this into your business. Let’s take a look at them now:
Improved retention rate
One of the biggest issues facing employers in today’s market is employee retention. With companies investing more in compensation packages, it’s easy to become a victim of high employee turnover. Having a large turnover of staff is harmful not only to productivity but to business costs. Investing in the right salary and a competitive benefits package can increase current employee motivation plus attract the kind of talent that would be perfect within your organisation.
Paying just a salary in today’s market just doesn’t cut it. Employees and candidates alike need to have an enjoyable and inclusive experience with your business. We recently documented the trends that we predict will emerge in 2024 for recruitment. You can read that here.
A competitive compensation package can include things such as bonuses, healthcare plans, pensions etc.
Make it your unique selling point.
Having up-to-date salary data helps your organisation stand out from your competitors. The process of conducting these salary benchmarking reports highlights changes that can be made to your organisation. The data allows you to offer fair but competitive packages that attract top-quality candidates.
This can then go towards your company’s USP’s, which you can then advertise and market through your offline and online presence.
Always look to improve.
With the clarity that comes with a salary benchmarking report, you can look into how to improve your internal pay and benefits package. It is easy to overlook your internal pay and compensation structures, so having that fresh look allows you to make improvements to make your employees happy and attract future team members. The reports will also highlight the areas in which your competitors are doing better than you, so the information in the reports is invaluable.
Need expert advice?
To get the best results from your salary benchmarking reports, it’s a good idea to partner with a recruitment agency.
Not only does partnering get you the most accurate results, but it also alleviates time within your organisation. You will have a dedicated external team who will handle the whole process for you, leaving you to focus your attention on more pressing matters of your business.
Here at Mase, we pride ourselves on only offering our clients with the most reliable data. We gather information from businesses and organisations just like yours. This allows us to offer you truly unique data, which allows you to perfect your pay and compensation packages.
To find out more information on our salary benchmarking reports, you can head over to the page here.