Compensation benchmarking compares pay levels and structures against relevant external markets. It helps organizations understand whether they pay competitively for talent. Regular benchmarking informs compensation decisions and helps attract and retain employees.
Data Sources
Benchmarking data comes from published salary surveys, compensation databases, industry associations, recruiting data, and custom surveys. Quality varies by source and market coverage. Using multiple sources and understanding methodology improves reliability.
Matching Jobs
Effective benchmarking requires matching internal jobs to appropriate market comparators. This means comparing based on job content and level, not just title. Job descriptions, reporting relationships, and scope help determine appropriate matches.
International Benchmarking
Global organizations need market data for each country where they employ. Local market rates differ substantially. Currency fluctuations, cost of living differences, and varying benefit requirements complicate comparisons. Country-specific benchmarking ensures local competitiveness.