What Does Good Pay Benchmarking Look Like?
Basing your organisations market pay position on robust pay benchmarking data is a must, not only enabling you to create a solid pay structure, but also giving you confidence in your pay decisions.
This can be easier said than done, but below are some simple steps you can take to improve the validity of your pay benchmarking data.
Understand Why You Are Benchmarking Pay
Identify what you are trying to achieve by benchmarking pay. Critical to attracting and retaining staff is knowledge of where the market is in respect to key roles. For example, does your organisation want to pay at a particular pay point relative to the market, or do you have limited resources and need to direct funds where they will have the greatest impact?
Ensure Resource Is Available For Salary Benchmarking
Instead of being an added expense, done properly pay benchmarking could actually save you money. Answering the questions set out below will help you highlight the financial benefits of benchmarking:
– How successful are your recruitment campaigns? Is your organisation wasting money by setting salaries at the wrong market rate?
– Are there areas where turnover is high? Can you be confident that people are leaving for reasons other than pay?
– How much are you spending adjusting salaries outside of the annual pay review? Could this be controlled by benchmarking pay more effectively?
Identifying what is driving pay concerns may help you secure additional resource for pay benchmarking which could save you money in the long-term.
Getting The Right Salary Data
The old adage that you “get out what you put in” applies to the many sources of salary data. Participating and investing in a good salary survey will give you solid pay data that you can use to underpin your pay structure.
Many salary surveys will only allow you to access their figures if you share your organisations data too, but we believe this investment in time and money is well worth it. Ideally, choose surveys that have a clear matching methodology which you can easily apply to roles in your organisation. If you can, identify the surveys that are known for capturing pay data from organisations in your sector.
Also consider the other participant organisations – ensuring some of them are at least directly comparable to yours. Factors such as location, employee numbers, turnover and pay levels play a crucial part in determining solid relevant pay benchmarking data. Look for multiple sources of data so you are not reliant on just one survey. Free data is readily available online from recruitment agency salary surveys and organisations such as job recruitment site Glassdoor.
But beware, don’t just take the data at face value. Data from surveys and recruitment sites is usually very high-level and needs qualifying. In particular recruitment sites where pay can often be inflated. Often these sources only provide advertised salary levels, not actual salary levels. It can also be misleading as data is largely based on job titles which we know at times can be misleading.
Using market data from a number of places will ensure you produce a rounded and robust outcome that smoothes out any anomalies which may exist in your sources. If you need help making sense with any of this data, we are here to help. Reward Connected can support you in interpreting survey and recruitment agency data, and guide your organisation towards finding the most appropriate answer. Speak to Michelle at Reward Connected today for help.
Join a Pay Club At Reward Connected
Our Pay Clubs are a great way of finding industry-specific data, as they allow our members to get pay data from comparable organisations.
Reward Connected pay clubs are focused on narrow industries precisely to give members comparable data for effective pay benchmarking. For example, in the not-for-profit sector we have Pay Clubs for areas including Housing Associations, International Charities based in the UK, Medical Research Charities and Membership Organisations, as well as many other areas.
“The Reward Connected Pay club gives us a more relevant and targeted network in which to compare our reward structures and ensure that we have relevant benchmarking data. There is also the added bonus that Reward Connected provide a conduit to check out specific queries always ensuring a speedy response.” Mary O’Shea, ICR
Contact us now about our pay clubs.
Good Pay Benchmarking Must Be Regular
Over time your organisation pay can become skewed, either due to market issues or historical systems.
To ensure fair and equal pay among all your staff, we recommend organisations undertake thorough pay benchmarking exercises every 2 to 3 years to make sure pay and benefits are right for everyone at your company. This regularity will also allow you to remain competitive and in-line with the external market.
Good Pay Benchmarking Looks At The Full Reward Package
When reviewing employee pay, we recommend benefits are also considered to ensure the total reward package is attractive for staff and new recruits. A balance needs to be considered to ensure an organisation is not pricing itself out of the market by either offering a too low or too high a full package.
Many benefits and wellbeing initiatives you might offer staff will be specific to your workforce. Factors such as location, the type of work and demographics of your people will all determine what will work for your organisation.
Consider including a benefits review with your pay benchmarking exercise.
Use An Independent Pay Consultant
Using an experienced, external partner to support pay benchmarking often increases credibility.
“Reward Connected is my go to for Pay and Benefits advice.” HR Director International Medical Corps UK
Reward Connected is independent of the large pay data publishers, so we are ideally placed to advise on the right data sources for your organisation. Our extensive experience in pay benchmarking allows us to analyse complex data, identify your organisation’s position against the external market and use this to define or refine your pay strategy.
Alongside this, we can undertake benefit reviews to ensure your full reward package is market competitive.
If that sounds like the help you need to ensure your organisation is getting the most from their pay benchmarking, contact us today. We look forward to helping you get the most from your pay benchmarking.