Why should HR leaders care about salary benchmarking?
Salary benchmarking helps HR leaders implement competitive compensation packages. It’s also one of the most effective methods they can use to:
- Build a robust compensation policy that safeguards pay equality
- Attract and retain the best talent
- Create trust and an engaged working environment
These are all key concerns for companies operating in 2023 and the new EU transparency rules make a fair pay policy more relevant than ever. We’ll discuss the rules in more detail shortly. But first, why have we written this blog?
We want to get you up to speed on what salary benchmarking is, why it’s important and – last, but not least – show you how Figures is the best tool you can use for it.
What is salary benchmarking?
It’s a process that HR professionals use to compare and evaluate the competitiveness of their business’s salaries and benefits packages, for new or existing roles.
To begin salary benchmarking, you need:
- Accurate job descriptions (including duties, responsibilities, skills and experience levels)
- Internal finance information (budgets, salaries and other benefits (including bonuses))
- External salary benchmarking data (i.e., information on the compensation on offer for similar roles in the same profession and market)
You can then compare the data and evaluate your own salaries to assess whether you are where you want to be. Consider whether you are paying above, below or the same as the rest of the market. Do you have a gender pay gap?
Why is salary benchmarking important for HR leaders?
There are so many reasons! We’re going to focus on three for now.
#1 It can help you manage your budget
Salary benchmarking can help you figure out where you are spending too much, and where you are spending too little. This can help you identify the changes you need to make to fix this and make your budget go further.
If you’re hiring, it can help you work out the talent your business can afford, and if you’re looking to scale, it can help you determine the investment you need.
So, if you’re looking to spend efficiently, we think the real question should be: why wouldn’t you salary benchmark?!
#2 It can help you retain your talent
Some of the most recent labour market studies in the UK and across OECD countries show that the primary reason workers move jobs is for better pay and benefits.
A high employee turnover results in many undesirable consequences, including substantial replacement costs (more on those here), disruptions to business operations and potential negative impacts on company culture.
You are at risk of all of these and more if you are not offering a competitive compensation package. The risk isn’t just theoretical either – the OECD have found that people are switching jobs more often than ever before.
Salary benchmarking is a preventative measure you can use to avoid this and increase employee retention and engagement. Find out more about how you can use salary benchmarking data to do this here.
#3 It can get you prepared for the new EU pay transparency directive
These make competitive salaries and robust and fair compensation policies more important than ever. Why?
Increased pay transparency
The rules will make it easier for potential candidates and existing employees to access information about pay and benefits. Unless businesses provide this already of course!
They will apply to all companies operating in the EU (from 2024) and will:
- Require them to provide information about the initial pay level or range in a job ad or before an interview
- Give employees the right to receive information about individual and average pay levels for workers who do the same work or work of equal value to them
But that’s not all.
New gender pay gap reporting rules and rights
The rules will also introduce gender pay gap reporting measures for all companies with 100 employees or more. There will be sanctions for non-compliance, and compensation and pay assessment rights for workers who suffer pay discrimination.
While some companies may monitor pay equality levels and publish this data already, there’s a clear need for those who do not to act now.
This way, you can ensure you have compliant data-driven compensation packages that you are proud to publish when the time comes. Salary benchmarking is a great way to achieve this and attract the best talent while you’re at it.
Want to get started? Let’s look at how Figures can help.
How can Figures help?
Figures provide 100% verified real-time compensation datasets for European and UK markets via our own all-in-one compensation platform.
This means you no longer need to spend hours and hours online trying to find reliable salary benchmarking data. And if you’re worried you won’t know what to do with it or how to use it, don’t – we are the compensation experts so we’ve got that covered too!
Our platform integrates seamlessly with your HRIS making it super simple to use. It will do all the hard work for you with various salary benchmark data analysis options, a budget calculator, salary grid and actionable gender pay gap tools.
Want to know more? Read about how our customers are using it to achieve fair, efficient data-driven results and create robust, fair compensation policies that scale.
Or learn more about how our platform works here. You can even try it out for yourself!
Some of our customer highlights include:
- Lucca, who used our salary benchmarking data to develop a sound scalable salary policy as part of their preparations to secure €65 million Series A funding in 2022.
- Treatwell, who are using our platform and salary benchmarking reports to recruit over 600 new employees across 13 different markets in Europe in 2023, and to manage salary reviews efficiently.
- Meilleurs Agents, who share our salary benchmark data with their employees to increase transparency and build a culture of trust.
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.
- Follow us on LinkedIn to never miss an update
- Learn more about compensation and best practices on our blog
- Check out our product tutorials on YouTube