Why benchmarking salaries matters

11 Mar 24 | Blog

It’s important to benchmark your organisation’s salaries for multiple reasons – like being able to attract the best talent, optimising your employees’ performance and productivity, and knowing how to retain your staff.

We’ve discussed what salary benchmarking is, but why is it a worthwhile exercise? Talking about pay isn’t always a comfortable topic, and it might seem unwise to ‘shake things up’ by examining your pay practices. But in this article, we’ll explain several reasons it’s worth doing.

Salary transparency matters to your talent

The vague promise of ‘competitive pay’ on job ads just won’t cut it anymore. The people you want to hire expect to know salary information upfront – 70% of prospective hires want to see it, according to Glassdoor. In some places – like New York – listing a salary range has even become a legal requirement as a reflection of that growing trend. 

Salary benchmarking means you can be comfortable with being transparent about the range you’re willing to offer – as you know you aren’t going wildly below (or above) market rate. It also means you can justify your pay offers in interview situations. 

Offering a competitive rate of pay? It pays off 

Let’s be realistic: salaries matter. No-one’s going to give you their best efforts if they feel they’re being underpaid – and research supports that. SHRM research found that 60% of employees consider their pay to be a top factor in job satisfaction, and several studies point to a link between higher wages and higher productivity too. 

It stands to reason. As important as other factors like ‘a sense of purpose’ are, people work to get paid. If they feel they’re paid fairly, they’re likely to make sure they’re earning it. 

Unfair pay practices UK leaders should avoid

Salary benchmarking can also be done as part of a pay audit, if you want to spot and amend unfair pay practices in your organisation. The gender pay gap and the even greater pay gap experienced by minority ethnic groups are still things that leaders need to be aware of.

Benchmarking different groups in your organisation can identify any pay discrepancies, and let you feel confident that you’re ‘walking the walk’ when it comes to fair pay.

Benchmark salary throughout the employee lifecycle:

Attract talent

When you’re hiring new staff, a salary benchmarking exercise means you can feel confident about the pay range you advertise. Crucially, so you do include a pay range – because it’s something prospective hires increasingly expect to see.

Engage talent 

Employee satisfaction and engagement is linked to offering competitive pay. By staying on top of industry fluctuations, and keeping an eye on internal salary levels, you can create a workforce that’s willing to offer their best work.

Retain talent 

It’s no secret that the easier way to get a sizable pay rise is to move jobs. If you’re serious about retaining your talent – and understand the high cost of attrition – then staying on top of salary benchmarks means you know what it’ll take to keep them.  

Qlearsite’s HR benchmarking platform: sign up for free

We see benchmarking as the perfect starting point for any people analytics project – whether it’s reviewing pay structures, or trying to reduce absenteeism. That’s why we built a HR benchmarking tool that people leaders can use for free.

Here’s how it works:

  1. Sign up for your free account here
  2. Connect your HR data, safely and securely 
  3. Get instant insights and benchmark data

Make informed decisions, lead with confidence

Sickness absence management: a guide

Sickness absence management: the ultimate guide

In your organisation, do employees have to call in when too unwell to work - rather than send a...
What is absenteeism?

What is absenteeism, and why should you measure it?

Absenteeism refers to a pattern of unplanned time off from work, often due to sickness or other...
6 reasons to use a salary benchmarking tool

6 reasons to use a salary benchmarking tool

If you’ve been following our blog, you’ll have learnt what benchmarking is, what salary...
Everything people leaders needs to know about salary benchmarks

What is salary benchmarking?

Salary benchmarking is about comparing your organisation’s salaries to similar roles in different...
The text says "What is benchmarking Everything people leaders need to know"

What is benchmarking? Everything people leaders should know

Benchmarking is about making comparisons. You can compare your organisation’s metrics against an...
People saying bye to each other

The ultimate guide to attrition rates

People start jobs. People leave jobs. It’s just the natural order of things. You expect to see...
Man and woman working in tech

Gender ratio benchmarks: is the tech sector improving?

Steve Jobs. Elon Musk. Bill Gates. Mark Zuckerberg. When you think of tech leaders, these are...
Software integration illustration

How (and why) to choose people analytics software

We live in a data-driven era. That’s because we know we’ve already got a lot of the answers, it’s...

The Legal Sector and presenteeism: benchmark insights

You wake up with streaming eyes, a congested nose, and a banging headache. It’s official: you’re...

Do women take more time off? A Housing Sector case study

Sick days. Annual leave. Emergency time off. There’s a lot of legitimate reasons to miss a day or...

Get a live demo
of the platform 

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."