Benchmarking is the process in which a company measures its pay, benefits, and other metrics against others in an industry. Many companies analyze their salary and benefit structures. They want to ensure they are competitive in the market.
Salary benchmarking is when a company collects and evaluates salary data
. Then they compare the data to competitors.
For example, if you are a recruiter, a client may ask you what the standard salary is for a job. By benchmarking, you can advise your clients on best practices for salary standards.
How is it beneficial?
There are many reasons why it is important. Here are a few:
Hiring Top Talent
By benchmarking pay, you show the job is competitive within the market. You can identify trends in labor costs as well. Benchmarking pay helps to continue to attract, keep, and motivate employees. Paying a competitive salary ensures you have a competitive edge.
High employee turnover hurts your company. If you offer competitive pay, you attract top-quality candidates. When you hire top talent, you will reduce your costs of turnover.
By benchmarking, a company ensures equal and fair treatment for all employees. It will ensure you are following all federal regulations as well.
By using industry standards, a recruiter knows that the pay and benefits a company is using are unbiased towards any protected class. Fair pay can improve job satisfaction.
The market is shifting. Salary trends can change often. As a recruiter, you can advise your client on top trends within your region, sector, and job title.
Benchmarking salaries can be difficult. Using a third party can show the data is impartial and credible. It is vital to top companies to ensure they show continuous improvement. Whether you are benchmarking salaries, benefits, or even quality, you show your drive to hire top talent.