Retention Reinvented: How Leading Companies Employ Salary Benchmarking Tools Effectively
As the price of everything from food to rent and mortgages continues to rise — employees across Europe and the UK and trying to make their wages go further. But often, this can feel like an impossible task. As a result, many employees feel like they’ve got no other option than to change jobs and increase their wages.
Pay is a huge part of employee retention — but it’s not the only part of the puzzle. Forward-thinking companies are now reinventing retention by combining competitive pay with a total rewards package that includes things like flexible working and enhanced parental leave.
To maximise the employee experience and increase retention, you’ll need to assess and adjust salaries. Using a salary benchmarking tool is the most effective way to do this. Alongside updating your compensation, it’s a good idea to run surveys to uncover exactly what your employees want in terms of benefits and working environment.
Get all this right — and your employees won’t want to work anywhere else.
In this article, we’ll take a closer look at why salary benchmarking is becoming a key retention strategy, and how companies are making it work for them.
Why compensation matters for employee retention
Inflation continues to rise, and wage increases aren’t keeping pace. According to the European Central Bank, inflation across Europe is expected to average out at 6.3% for 2023. In comparison, wages are predicted to rise by only 5.2%. That leaves employees at a deficit. Even if they love their jobs overall, some may be very tempted to look for a higher-paying alternative.
When employees leave, replacing them is expensive but they also take with them a significant amount of company-specific knowledge and talent. That’s why many companies are starting to use counteroffers as a retention strategy.
The CIPD Labour Market Outlook report found that 40% of employers in the UK have made a counteroffer over the last year.
If you’re going to use this increasingly popular retention tactic, it’s crucial to know where to position your offer. Too low and your employee will walk away, too high and you’ll end up spending more than necessary.
Employees also want to know their salaries are fair, with research showing that 77% of employees would look for another job if they discovered a significant gender pay gap at their company.
Salary benchmarking can help companies solve both of these employee experience and retention issues. By using real-time data to establish fair salaries for all employees, companies can retain their talent and drive business growth.
Salary benchmarking 101
Ready to know how salary benchmarking works? For all the details, read our full guide, but in summary, benchmarking can help:
- Align your company with industry standards
- Demonstrate your commitment to fair and equitable wages.
- Retain talent by ensuring fair yet competitive salaries.
- Enhance your brand.
- Boost employee satisfaction, engagement, and performance.
Sounds great, right? What’s key to getting this process right is choosing a compensation benchmarking tool that provides reliable, industry-specific data. Choosing a tool that uses real-time data is also key so that your salaries are based on current industry standards.
If you’re ready to level up your compensation philosophy with salary benchmarking, take inspiration from how these three companies made it work for them.
Case study #1: Planes
At digital product design studio Planes, the employee experience is a top priority. It offers a range of policies including flexible working, parental leave, sabbaticals, and enhanced sick pay, all of which led to it being voted as one of Flexa’s Top 20 Most Flexible Companies.
People Lead Sophie said that her main goal “is to make sure that Planes is a place where our team members are growing and feel supported along that journey… and very importantly that they enjoy being here. We believe that by making sure our team is paid fairly, we will not only have a more diverse team but a happier one.”
To achieve this goal, Sophie knew the people team needed access to benchmarking data. Unfortunately, being an agency severely limited their choices. “A lot of salary data is predominantly start-ups and scale-ups. A lot of places don’t have salary figures on job descriptions. So I’d be speaking to people to find out what theirs were,” explained Sophie.
But once they discovered Figures, the narrative began to change.
Using Figures, the people team at Planes could filter the extensive dataset to effectively benchmark against other agencies and consultancies. This has offered significant benefits for salary transparency.
“Transparency here is already important but now our teams can see that we’re looking to be competitive and can see that we’re benchmarking against other companies,” said Sophie. “We’re also able to share the analysis around the gender pay gap and how that’s broken down between management and practices.”
Being so transparent with how salaries are calculated at Planes helps to boost employee trust, plus helps the people team plan salary increases. “Previously, I had to figure out an Excel formula to work out what a 10% or 20% increase across the year would do to our top line. Now Figures can do that, taking inflation into account as well. That’s going to be really helpful.”
Case study #2: Nuffield Health
Healthcare charity Nuffield Health operates hospitals and fitness centres across the UK. With over 16,000 employees the charity wanted to introduce an updated pay policy, including a consistent salary framework across all levels of the organisation.
A key aspect of their new policy was developing a competitive compensation package that helped attract and retain talent. Salary benchmarking was used to ensure pay at all levels of the organisation was competitive compared to market rates.
In 2022, Nuffield Health gave all their employees a pay increase, with priority placed on those in lower salary brackets. This was combined with initiatives designed to boost employee engagement, well-being, and retention. The charity also made improvements towards closing the gender pay gap, reducing the figure to 3.4% for 2022, compared to the national average of 14.9%.
The new pay policy is also flexible enough to account for adjustments due to factors like rising inflation and labour shortages, helping to attract talent and boost engagment, while also allowing managers to make cost-effective decisions.
Case study #3: MeilleursAgents
When real estate company MeilleursAgents experienced rapid growth, the HR team knew they needed to not only work fast to hire new talent but also to boost employee retention. To achieve this, they decided to focus on adjusting their salary structure to make it as attractive as possible to both existing and potential employees.
Initially, they started benchmarking salary data by collecting data manually, from websites, Slack groups, recruitment firms, and anywhere else they could find it. Unfortunately, this only resulted in data that was unreliable, biased, and out of date.
Figures showed them there was a better way.
Access to our high-quality, reliable data meant MeilleursAgents could accurately benchmark all their employee salaries. Gaining access to such detailed, geographical data meant they could offer the competitive salaries that candidates expect.
For existing employees, transitioning to using Figures data also brought multiple benefits. Data is shared openly with employees, increasing transparency and trust during salary conversations. By building a culture of trust in this way, MeilleursAgents has increased employee retention and loyalty.
Speaking about how Figures helped transform their approach to employee compensation, Aminata Pelletier, Head of People at MeilleursAgents said: “We can make better, more confident salary decisions backed up by reliable data. This makes compensation conversations so much easier. I don’t know what I’d do without it.”
Futureproof your retention strategy, with Figures
Retaining and engaging top talent is more important than ever before. Download our ebook to discover how the top-performing companies are using salary benchmarking as a key part of their retention and engagement strategies.