What is salary benchmarking?

4 Mar 24 | Blog

Salary benchmarking is about comparing your organisation’s salaries to similar roles in different companies, usually factoring in which industry you’re in. It’s a way of understanding if you’re offering the right compensation.

Money makes the world go round. Your employees are looking for a value exchange, when they spend however-many-hours working for you. Because no-one works for free – even charity volunteers are getting a sense of satisfaction from giving back (and that’s not a bad thing!).

But however much you appreciate your employees, budgets are a reality. That’s where benchmarking salaries comes in…

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What is a salary benchmark?

A salary benchmark is something to compare an internal salary against, to see if you’re meeting the market rate. It’s often based on several external sources – factoring in geography, industry, job role, and seniority to make sure it’s completely relevant.

Why benchmark salary?

How does salary benchmarking work?

As with any data analysis project, salary benchmarking isn’t always easy. Anything involving multiple sources of data, different variables, and such sensitive information is bound to be complex. So if you want to do salary benchmarking, you need a process.

Here’s a few steps people usually take:

  • Collect data about salaries: there’s lots of ways to do this, from acquiring a database to manually trawling through the internet. Decide what works best for you, and consider the need for accuracy in this step
  • Think about job titles: HR Director vs Chief Happiness Officer? It’s a cliche, but job titles can differ – so you need to understand job function and job seniority, so things don’t get too confusing down the line
  • Factor in size & industry: a start-up and a multinational company aren’t going to pay the same wages, obviously. And charities will pay less than the finance sector – so you need to factor all this in
  • Find the salary range: once you’ve got all the data, and factored every variable in, you can understand the total salary range of the role you’re benchmarking – from the lowest paid to the highest
  • See where you sit: now it’s time to look within – measure where your current salaries sit on that sliding scale, to understand if you’re meeting market rate, exceeding it, or falling far below it

A word of warning…

Don’t underestimate the importance of data being accurate, relevant, and up-to-date. Without this at the heart of your benchmarking exercise, it’s all going to fall apart.

Benchmarking salaries with Qlearsite

There’s several ways you can approach a salary benchmarking exercise – but most of them involve manual work, a lot of time, unreliable data, and a whole heap of stress. For those reasons, your best bet is using a salary benchmarking tool that does the bulk of the work for you.  

Our platform offers dynamic, spreadsheet-free, automatic salary benchmarking. Here’s the salary features you can expect to see: 

  •  Salary benchmarks dynamically mapped to your organisation’s roles

  • In-app visualisations of your pay vs. benchmark, separated by role​

  • Comparison of total salary costs by function, teams, & other demographics​

  • Automatic calculation and tracking of absence and attrition costs

  • Monthly data updates reflecting trends or changes in market pricing​ 

With global salary data from over 1 million companies, and 100+ million job titles, you’ll be able to make pay decisions quickly and easily. That’s a lot of time saved! Find out more…

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Anne Therese Bogen, Head of HR, Thommessen

"Qlearsite’s platform is a really helpful tool to push through OKRs – it’s easier when you have statistics and concrete evidence to back up initiatives."