In today’s job market, workers are driven by many factors flexible working, career growth opportunities, strong company culture. But for most professionals, one thing still tops the list: salary.
According to our Talent Trends survey, more than half of jobseekers (54%) view a higher salary as essential when applying for or accepting a new role. At the same time, 34% of employers struggled to hire over the past year, with 40% citing salary misalignment as the biggest obstacle.
The reality is simple: top talent comes at a price. To secure the best candidates and keep them on board, companies must offer competitive, data-driven compensation. This is where salary benchmarking becomes an essential part of your recruitment strategy.
What Is Salary Benchmarking?
Salary benchmarking, also known as compensation benchmarking, is the process of comparing your organisation’s pay rates against the broader market. It typically involves analysing job descriptions, reviewing industry standards, and referencing external salary data.
Done correctly, salary benchmarking not only helps you remain competitive, but also ensures your pay structure is fair, transparent, and aligned with both employee expectations and business objectives.
The Benefits of Salary Benchmarking
Stay Competitive in the Talent Market
Professionals today are well-informed. Over 40% regularly check salary trends to understand their market value. If your pay falls below the industry average, chances are you’ll struggle to attract high-quality applicants or retain them.
Offering competitive salaries based on current data enhances your employer brand and helps you stand out in a crowded market.
Budget with Confidence
Your workforce is one of your most valuable investments. Salary benchmarking helps you build a more accurate and sustainable people budget, ensuring you allocate resources effectively while planning for future growth.
It also provides clarity on whether you can afford to hire for certain roles now, or if you need to phase hiring into the longer term.
Attract and Retain High-Performing Employees
Salary dissatisfaction is a major driver of turnover. Our findings show that 36% of workers are unhappy with their current pay, and 55% plan to look for a new job within six months as a result.
Offering competitive pay from the outset and adjusting as needed can significantly improve your ability to hold on to top performers.
How to Conduct Salary Benchmarking
Here’s a step-by-step guide to help you build a strong salary benchmarking process:
1. Define the Role Clearly
Start by outlining the position in detail job title, required skills, experience level, responsibilities, and location. Industry and geographic context matter greatly, as salaries can vary widely by region and sector.
2. Gather and Analyse Market Data
Create a baseline by listing your existing roles and current pay structures. Then compare this with external salary data.
You can gather this from industry reports, public data sources, job listings, or conduct your own salary surveys. Identify where your salaries stand against the market and whether adjustments are needed to remain competitive.
3. Use Salary Benchmarking Tools
Benchmarking manually can be time-consuming and inconsistent. This is where tools like salary guides come in.
At Resource Provider Ltd, we recommend using trusted resources such as national salary surveys or independent benchmarking reports to inform your approach. These tools help you stay aligned with market trends throughout the year and support consistent salary decisions for both new hires and current employees.
Putting Benchmarking into Action
Once you’ve gathered your insights, apply them strategically:
- During recruitment: Use benchmark data to create compelling job offers that attract top-tier candidates.
- In performance reviews: Incorporate updated salary benchmarks to support fair appraisals, raise discussions, and retention planning.
- For workforce planning: Make informed decisions on workforce structure, investment, and talent strategy.
Ready to Strengthen Your Compensation Strategy?Salary expectations continue to evolve and the most successful organisations are those that adapt with them. By staying informed and proactive, you’ll be in a stronger position to meet candidate expectations, reduce turnover, and build a motivated, high-performing workforce.
At Resource Provider Ltd, we provide career insight and workforce solutions that help you stay competitive in a fast-moving employment market. Explore our latest salary insights, or speak to our team to see how we can support your talent goals.