Salary benchmarking compares what an organisation pays for a given role against market survey data for equivalent roles elsewhere, to check whether its pay levels are competitive enough to attract and retain people.
What it means
Benchmarking works only when roles are compared like for like - matching by job grading level and responsibilities, not just job title, since titles vary widely between organisations for similar work.
Where it fits in
Benchmarking results typically feed back into pay-grade ranges, which in turn bound the pay decisions payroll later calculates against - a market that has moved up without a corresponding pay-grade review can leave an organisation's payroll cost structurally below market.
Key rules
- Compares internal pay against external market survey data.
- Must match roles by content and grade, not just job title.
- Results feed into pay-grade range reviews.
- A stale benchmark can leave pay grades, and payroll cost, below market.
