How to increase retention and employee satisfaction using a salary benchmarking tool
One of the main challenges facing tech companies today is how to attract, and then retain the top talent. And as an industry with above-average rates of employee turnover, there’s plenty of room for improvement.
Now more than ever before, employees want pay transparency, so they know that they’re being compensated fairly for their time and expertise. To offer this transparency, one key improvement that companies can implement within their pay policies is using a salary benchmarking tool.
In this article, we’ll explore how a lack of pay transparency can lead to dissatisfaction and high employee turnover. Over time, these issues can create significant costs, both in financial terms, and in the time it takes to train new employees. We’ll also find out exactly how salary benchmarking can be used to build a transparent compensation strategy. A strategy that boosts employee retention and satisfaction by placing their value at the very heart of your company.
The hidden cost of employee turnover
Attracting and hiring talent is one thing, but many tech companies are discovering that retaining employees can be just as difficult. The industry average for employee turnover currently sits at 10.6%. But turnover within the tech and media industry is above average, sitting at 12.9%.
There are many different reasons for this high employee turnover, including:
Lack of recognition
Lack of flexible working practices
No opportunities for progression
If employees feel they’re not being fairly compensated or that there is a gender pay gap at their company, they may decide to move to another role at a different company, with a better salary. Microsoft’s latest Work Trend Index Annual Report found that 52% of Gen Z and Millennial employees are considering changing employers this year. The numbers for Gen X and Boomers thinking of moving to another job are slightly lower, at 35%. The report found that lack of fair compensation was one of the top 10 reasons given for leaving.
When an employee leaves, recruiting their replacement also comes at a significant cost. The Society for Human Resource Management (SHRM) lists the average cost per hire as just under €4,500. But in reality, most employers estimate that the total cost is usually more likely to be four times the salary of that particular position. This includes hard costs like advertising, but also soft costs including the time taken for screening, interviews, and decision-making.
Onboarding and training new employees also takes a significant amount of time. Generally, initial onboarding tasks are expected to take around 90 days, but it can take up to 12 months for a new employee to become a fully productive team member. For some tech companies like Google, the average tenure is just 1.3 years. That means by the time an employee is fully trained, they might already be thinking about leaving.
Within the tech industry, competition to secure top talent is fierce, and candidates are often choosing between multiple roles. If your recruitment process is too slow, your chosen candidate may have already accepted another position elsewhere.
The combination of high demand and increasing competition within the tech industry means that compensation is often a key factor. While the obvious choice might be to increase your salary offerings, how do you know if what you’re offering is fair? The answer is to use a salary benchmarking tool.
How to use salary benchmarking to boost retention and satisfaction
Using a salary benchmark tool is a valuable strategy for setting competitive pay and as a result, improving employee satisfaction. Pay transparency is also, in general, a powerful way to drive equity within your company. According to a recent survey by Gartner, only 34% of employees feel that their pay is equitable. These employees may be less engaged, and more likely to look for another job elsewhere. In the Figures Gender Pay Gap and Pay Transparency Report we found that pay transparency is a key driver for pay equality.
While employee perception of pay equity is partly based on compensation, organisational trust is also a huge driver. But a lot of the time, companies don’t always share how an employee’s pay is determined, with only 38% of employees being given this information. Communicating the way you compensate is key to building trust and employee satisfaction.
Being open, and explaining how and why you’re using a salary benchmarking tool can help build trust because employees know how you’re determining their salary, and are confident that they’re being paid fairly.
In the current economic climate, with constantly changing and rising inflation rates it’s vital to use real-time salary benchmarking, backed up by reliable, high-quality data. A recent study found that while annual salary reviews are most popular, some companies are shifting towards more frequent reviews so they can react more quickly to changes in the market.
Preview the Figures salary check using UK and European market data, and discover how to compare your compensation with your competitors.
When SaaS company Duel wanted to create a more transparent payment structure, they turned to Figures for help. Thanks to our reliable market data, Duel can forecast salaries for new roles and also help inform salary reviews for existing staff. This helps boost employee satisfaction and retention, reinforcing the value that Duel places on its employees. Thanks to a fully transparent payment structure, backed up by Figures data, Duel can expand and grow sustainably.
Using a salary checker can help:
Compare your compensation policy with similar companies
Identify which employees could be at risk of leaving due to low salary
Set fair salaries for new and existing employees, based on real-time data
Level up pay equity using unique indicators
Knowing how your salaries compare to competitors within the same industry means you can either share that your wages are above average or look at increasing spending to become more competitive to attract and retain the top talent.
Now more than ever, the foundations of success are built on transparency and trust. Join Figures now and increase employee retention and satisfaction by offering equitable, transparent pay.
Looking for more resources, tools and content?
That's why we created Figures, you don't need to be a compensation expert, we are. With our an all-in-one compensation platform updated in real-time, expert HR and People insights, we want to make your job more efficient and power more fair decisions.
What Workers Want: The Best Benefits For Every Generation
In this article, we’ll take a deep dive into what really matters to each generation of employees. By the end, you’ll have all the information you need to build a benefits programme that works for every single member of your team, whether they’re 21 or 81.