As the financial year end draws closer and with it the salary review, you want to reward your employees fairly. John McGill provides some insight into benchmarking against your chosen market sector to achieve this.
Any organisation looking to develop a compelling offering to staff will need to consider how its remuneration compares across its industry. As the well-worn saying goes: Staff are the largest asset any organisation possesses, so having concrete information on salaries will ensure they are properly rewarded.
Among the most important purposes for remuneration benchmarking is to understand how individuals with a certain skill set are performing, an issue that is all the more important given the ongoing competition for talented workers.
Remuneration benchmarking to fill talent shortages
In the last few years, talent shortages have become one of the biggest trends in human resources. Companies that were accustomed to having the pick of eager candidates are now finding it harder to attract and retain top employees.
While any response to a talent shortage has to be multi-pronged, an effective remuneration strategy will be one of the most important pillars of any approach.
The value of a salary package for attracting and retaining workers was underscored by research last year from the US recruitment platform Glassdoor. Among hiring managers, compensation was cited as the most attractive feature of a job, ahead of the type of work, the reputation of the company and career advancement opportunities.
These same managers reported that employee attrition is a focus for them, with voluntary staff departures expected to increase in 2015.
While salary is clearly a popular strategy for filling talent shortages, it is equally important that organisations aren’t inadvertently paying staff too much.
Finding the Goldilocks point
The challenge for any employer is to find a point where they are rewarding workers with a salary package that is in line with their skill level, but also one where staff aren’t overpaid. For hiring managers who are mindful of their payroll expenses, overcommitting to staff pay can create ongoing financial issues.
Finding this Goldilocks point – where staff are neither underpaid nor overpaid for their responsibilities and skill sets – is incredibly difficult without a benchmark of information from across comparable roles.
However, once an organisation has detailed information on equivalent salaries, it becomes a lot easier to pinpoint a middle ground that is appropriate for a role.
Ultimately, having a benchmark to measure employee remuneration against is about making informed business decisions.
As data becomes increasingly important at every level of an organisation, it’s important to use this information to drive the organisation’s remuneration strategy.
