Start with roles that have the highest turnover, the hardest-to-fill positions, and the largest headcount. Skipping steps or cutting corners leads to inaccurate data and bad pay decisions. 73%Employees who research pay before accepting an offer (Glassdoor) Benchmarking is no longer just an internal planning tool; it’s a public-facing necessity. Companies that haven’t benchmarked their salaries will find themselves scrambling to publish ranges they can’t justify. As of 2026, over 10 US states and several cities require salary ranges on job postings.

If your national average is too low to hire in cities or too high for your budget in others, it’s time to move to a tiered zone structure. Organizations should use benchmarking data to justify market adjustments for tenured staff. To address salary compression, HR should conduct a pay equity audit to identify employees whose pay has been eclipsed by market movement. Market data typically informs the midpoint, which represents the market https://medicarecure.com/portage-mental-health-advocate-expresses-frustration-over-lacking-support-portageonline-com.html target for a fully proficient employee.

Salary benchmarking surveys help experts and managers set pay ranges for a company by pinpointing the average salaries for roles with very similar job descriptions. These high-level steps include choosing data sources that line up with your company, aligning the data with your compensation strategy and creating salary ranges. Salary benchmarking offers valuable insight into pay trends, which enable organizations to create competitive and well-structured compensation plans. Instead, organizations identify benchmark jobs, roles that are common in the industry and have clear, consistent market data, to act as anchors for the entire pay structure.

• Look for companies in the same industry with processes you want to emulate.
• Break the role into its component responsibilities and find the closest survey matches.
• Employers can conduct an internal analysis of their compensation packages, but it will only take them so far.
• Match based on scope and responsibilities, then adjust for any unique elements of the role.
• Use location-adjusted data or develop geographic pay zones with explicit differentials.

Quantify potential pay gaps by gender, race and ethnicity, and estimate the costs to close them.

What skills are needed to get you there, and what does that talent cost? Read our compensation benchmarking article for a more detailed, step-by-step explanation of this process. This process allows companies to remain competitive, compliant, and attractive to both current and potential employees.

Elements of compensation benchmarking

This is your command center for navigating compensation — benchmarking pay with market data, building compliant job descriptions, and planning salary budgets with confidence. Talent Bring performance, skills, goals, and growth together so managers can develop people for the work ahead. When HR and Finance teams use real market data to guide pay decisions, they create stronger alignment, reduce risk, and support a better experience for their people. Segment results by geography or business unit to identify patterns that may affect retention or budget planning. The trend is moving toward location-agnostic pay for roles where talent is globally competitive, but most companies still use geographic adjustments.

3 Salary survey methodology and data quality

NetSuite provides a powerful, centralized HR data solution so https://higgertylaw.ca/blog/what-is-an-employment-standards-officer-inspection managers can efficiently access all the internal salary and benefits data needed for compensation benchmarking. Many companies are already collecting this information, but important data stores may be in disparate locations. To help make salary benchmarking more efficient, busy HR managers and staff need an enterprise-wide human capital management (HCM) solution.

What Is the Purpose of Salary Benchmarking?

HiBob also offers compensation management software that helps streamline your salary benchmarking process by keeping all your data in one place. Salary benchmarking provides the clarity to make confident, data-driven decisions that support retention, equity, and business performance. Salary benchmarking helps organizations set competitive, defensible pay based on market data—not guesswork.

• Benchmarking also contributes to better job descriptions and salary and benefits transparency.
• A people analytics solution may also estimate the cost of closing those gaps.
• The spread around that midpoint, the range width, reflects how much variation you’ll allow based on factors like experience, performance, and internal equity.
• Narrower ranges create more consistency and predictability.
• Overall compensation may include, for example, employer contributions to retirement or other saving plans, paid insurance, paid time off, or stock options.

These ranges become the guardrails for hiring offers, promotions, and annual adjustments. For each role, document the actual responsibilities, required skills, level of seniority, and reporting structure, because titles alone aren’t reliable for matching. Without information on what competitors in the same industry and location are paying their people, employers may find it difficult to attract and retain talent and control labor-related costs. Employers might want to land a candidate, but they also have to stay within budget and maintain pay equity throughout their organization. Compensation benchmarking, which is related to salary benchmarking, is the process of comparing salaries and benefits among organizations. Benchmarking gives HR teams a consistent, data-backed framework for pay decisions and produces documentation that https://10minutestorage.com/creating-an-effective-system-for-storing-paints-and-chemicals/ supports compliance and pay equity audits.

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