Key points:
- Companies lose talent to higher offers because they're using 7-month-old salary data while competitors have real-time intelligence.
- Investing €5,000 in benchmarking tools prevents the €100,000+ cost of replacing multiple employees who leave for better offers.
- When employees can see the market data behind their pay, trust replaces suspicion and collaboration replaces competition.
- The June 2026 Pay Transparency Directive requires published salary ranges – impossible to defend with outdated annual surveys.
- Modern benchmarking tools provide monthly-updated compensation data across millions of datapoints, turning 3-week Excel exercises into 15-minute decisions.
Every week, another resignation lands on your desk.
The reason? “I got a better offer.”
The truth is that many companies still rely on outdated surveys, creating a trust deficit that pushes talent straight to competitors.
Modern salary benchmarking transforms defensive pay discussions (“the survey says…”) into collaborative planning (“here's our market position, let’s discuss”). It’s the difference between losing three dependent experts in a single quarter and retaining your entire team.
This guide reveals how strategic benchmarking prevents talent loss, ensures pay equity, and prepares you for the EU Pay Transparency Directive – before your best people update their LinkedIn profiles.
Why is it important to implement salary benchmarking?
Salary benchmarking is the process of comparing your company’s pay rates against market data to ensure competitive and fair compensation.
It involves gathering internal salary information, analysing external market rates, and adjusting compensation to align with your company's philosophy and goals.
Think of it as your compensation GPS – without it, you’re navigating the talent market blindfolded while competitors use real-time directions. When you use it right, however, you get to enjoy all the wonders that come with timely and accurate data.
Maintain a competitive advantage
Your compensation strategy directly impacts your market position. Companies using real-time benchmarking report significant advantages:
- Speed wins deals. When a candidate has multiple offers, the company with current market data can make confident, competitive offers fast. Those relying on six-month-old surveys? They’re still calculating while candidates accept elsewhere.
- Proactive adjustments prevent reactive scrambling. Spendesk, the spend management platform, discovered this firsthand. After implementing Figures’ benchmarking tools, they could spot market shifts early and adjust before losing talent.
The math is compelling: invest €5,000 in benchmarking tools, or spend €180,000 replacing three engineers who left for better offers. Which sounds more strategic? Hint: It's not the one where you're playing talent magician – except instead of pulling rabbits from hats, you're watching engineers vanish into thin air.
Lower your attrition costs and manage your budget
Smart benchmarking creates budget efficiency. You’re not overpaying for roles where you already lead the market. You're not underpaying (and losing) talent in competitive positions. Every euro goes exactly where it creates maximum retention impact.
Attract and retain talent
It’s not a secret that salaries are usually the most important consideration for employees. After all, people want to know that they’ll be able to maintain their way of life and progress. However, the number is only one aspect – your compensation must also be fair and transparent, particularly during the recruitment process.
With modern benchmarking, you can easily transform your recruiting conversations.
❌ Before: "We think this is competitive based on our experience…"
✅ After: "Here's exactly where this offer sits in the current market, and here's our philosophy on positioning…"
That transparency builds trust before day one. Candidates know they’re joining a company that makes data-driven decisions, not one that lowballs and hopes for the best.
Ensure fair compensation
Fair pay is morally right, but it’s also measurably profitable. Research by Indeed shows that when employees believe they're paid fairly, they are “more engaged with and fulfilled by their work,” and 81% even say “they are more productive and loyal to their employers.”
Even more important than that, however, benchmarking eliminates the negotiation penalty. Without market data, salaries often reflect negotiation skills rather than value, and not everyone has those. This particularly impacts women and minorities who statistically negotiate less aggressively because they don’t want to risk unemployment. Result? Pay gaps that compound over time.
With benchmarking, every salary decision starts from the same foundation: current market reality and personal bias give way to data-driven decisions.
Lastly, three out of four employees would consider leaving if they discovered gender pay gaps at their company. Benchmarking helps you spot and fix these gaps before they become retention crises.
Comply with pay legislation
Without current benchmarking, compliance becomes impossible. How do you justify a salary range based on data from 2024? How do you defend pay decisions when employees can legally demand explanations?
From June 2026, the EU Pay Transparency Directive will come into force and will enforce several new rules:
- Companies must publish salary ranges for all positions.
- Pay gaps over 5% require justification and action plans.
- Employees gain the right to request peer salary information.
Still, don’t just focus on the obligation to comply. Instead, think about all the opportunities – organisations with transparent, benchmarked compensation will attract talent fleeing from companies still hiding behind “competitive salary” in job posts.
The hidden cost of bad benchmarking
We mentioned the benefits, but what happens if you choose to go the dark path?
Picture a regular Tuesday morning. Your star engineer walks in, resignation letter in hand. “I got an offer I can't refuse,” she says, showing a 20% higher salary from a competitor. Panicked, you pull up the May 2024 survey data, confident you’re paying at the 60th percentile.
But when she shows you the December 2024 market screenshot, the truth hits hard. The gap isn’t 20% – it’s seven months of invisible market movement that your annual survey completely missed.
Now do the math that keeps CFOs awake: replacing that senior engineer costs €60,000-90,000. Annual benchmarking tools, on the other hand, start at around €2,500. Bad benchmarking isn’t free – it’s catastrophically expensive.
And here’s the last nail in the coffin: every hidden benchmark becomes a trust withdrawal. When employees can’t see the data behind their compensation, they assume the worst. “They're hiding something” becomes the water cooler consensus. Once trust evaporates, even competitive salaries can’t stop the talent exodus.
The business case for better benchmarking
To illustrate the above points a bit better, imagine two separate companies, one year apart:
Company A “saves” €10,000, avoiding proper benchmarking tools.
Within months, they lose three engineers to competitors. Replacement costs? €150,000. Plus productivity loss, team disruption, and knowledge drain.
Company B invests €5,000 in real-time benchmarking.
They spot market shifts early, adjust two critical salaries proactively, and retain their entire team. The ROI? Priceless.
Still hearing “we can't afford proper tools”? Calculate one key departure’s cost. That single expense could cover your benchmarking budget for years. In the end, the question isn’t whether you can afford benchmarking – it’s whether you can afford to skip it.
Why benchmarking builds and retains winning teams
Beyond individual retention, transparent benchmarking completely transforms entire team dynamics:
- Psychological safety becomes possible. Google’s research identified this as the #1 factor for team performance. But psychological safety crumbles when people suspect pay inequity. How can you take risks or share ideas freely when you’re wondering if your colleague, Lazy Dave, earns 30% more?
- Collaboration replaces competition. Mystery compensation breeds internal rivalry. Transparent, fair pay based on market data? That creates trust. Suddenly, teammates share knowledge instead of hoarding it, mentor instead of undermining.
- Strategic team building accelerates. With clear, defensible pay bands, you can confidently blend senior mentors with ambitious juniors. Both groups trust the system because they can see the logic. No more losing senior talent who feel undervalued or juniors who feel exploited.
- Performance focus sharpens. Teams wondering about pay fairness spend energy on LinkedIn, not deliverables. When compensation transparency exists, that mental bandwidth redirects to actual work. The productivity gains often exceed the cost of benchmarking tools within months.
- Pay gaps shrink naturally. Market-based decisions eliminate the negotiation penalty that often disadvantages women and minorities. When everyone’s paid based on role and performance against clear benchmarks, not negotiation prowess, equity improves automatically.
What salary benchmarking really means today
The old model is broken. Traditional salary surveys arrive late, cost thousands, and gather dust while markets shift.
This results in outdated annual surveys, incorrect peer groups, or hidden results from employees, which all destroy trust instead of building it. Static PDFs from last year can’t capture this month's market reality, and employees know it.
Modern benchmarking transforms the entire approach. Instead of annual exercises with stale data, these platforms provide live salary information updated monthly. No more Excel gymnastics or PDF archaeology – just current market intelligence you can actually use and share.
"Salary secrecy creates anxiety. Salary transparency creates trust. It's that simple and that powerful."
Explains Virgile Raingeard, CEO of Figures and former HR leader.
The purpose of salary benchmarking is to ensure competitive and fair compensation by comparing internal pay rates against current market data. This process helps companies attract talent, reduce turnover, ensure pay equity, and comply with transparency regulations.
As we mentioned earlier, the EU Pay Transparency Directive hits in June 2026, and while this may feel distant now, it suddenly becomes very urgent when you realise that you’re still relying on 2025 data. Without monthly benchmark updates, your published ranges become indefensible relics.
So, the compliance countdown has started. Companies that begin now will have the tools to build credible structures. Those waiting? They’ll face June 2026 with panicked spreadsheets and legal exposure.
From raw benchmarks to salary bands
Yes, we’ve been rambling about how important up-to-date data is, but the truth is that it’s not super useful in its raw form. The real transformation happens when those numbers become actionable salary structures your entire organisation can use.
Figures delivers verified real-time compensation datasets across European and UK markets through one integrated platform. No more juggling multiple surveys or questioning data quality – everything flows from a single source of truth updated monthly.
The platform's HRIS integration changes the game entirely. Connect once, and your employee data syncs automatically. No manual exports, no version control nightmares, no wondering if you’re comparing current roles to outdated benchmarks.
Here’s the 15-minute miracle in action: Chen needs salary bands for a P3 Engineer in Warsaw. She pulls the benchmark (€43K median), applies a 60-90% spread, and generates a €34.4K-€51.6K band. What previously consumed weeks of Excel manipulation now finishes before her coffee cools down.
This speed enables quarterly band refreshes – essential when markets shift faster than annual review cycles. Your January bands might be outdated by April. With automated creation, staying current becomes routine, not heroic.
MeilleursAgents discovered this transformation firsthand. By establishing solid salary reviews based on shared benchmark data, they increased transparency and fostered genuine employee loyalty.
“With Figures, 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.”
Shares Aminata Pelletier, Head of People at MeilleursAgents.
Transform your salary benchmarking today with Figures
The choice is clear: continue losing talent to seven-month-old survey data, or join companies building trust through transparency.
Modern salary benchmarking isn’t about finding the “right” number hidden in expensive reports. It’s about having fresh, defensible data you can actually show people – transforming defensive pay discussions into collaborative planning sessions.
The Figures advantage? Real-time compensation intelligence across 3.5 million datapoints powered by Mercer. It helps you:
- Build balanced teams where senior mentors and ambitious juniors trust the system.
- Retain talent who know they're valued fairly.
- Prepare confidently for EU transparency requirements.
Stop choosing between competitive packages and budget control. With accurate benchmarking, you get both.
Ready to transform how you handle compensation? Book your free demo and discover why leading European companies trust Figures to keep their teams intact.
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