Strategies to Perform Compensation Benchmarking

A good compensation program helps to recruit and retain skilled employees, reward high performance, increase morale and increases Return on Investment (ROI)

In today's time, benchmarking process, also called market pricing, is the most popular type of compensation program, especially for those organizations that work in extremely competitive business environments. It is the act of matching a job as well as its duties to published salary surveys to determine worth.

Market benchmarking depends on reliable and valid survey data. Surveys are conducted by Management Association on many managerial, executive, technical, professional, production, and clerical positions, which are perfect for blending into your market benchmarking project. In addition, we produce industry-specific surveys for park district and library positions.

Benchmarking

Companies that are looking to improve practices and processes make use of the Benchmarking risk management tool. It helps in evaluating specific processes and practices related to the strategic goals and objectives of the company. The right use of benchmarking helps in assessing measures and results in several areas, including quality, compensation, product, service, and performance. By evaluating and measuring these areas, benchmarking, by measuring and evaluating these areas help organizations cut losses and costs. Benchmarking is never-ending and is not easy. Risk managers are aware that it is a critical process, which is important to the success of any entity, especially by correctly pinpointing where a company is today, so goals can be taken for improvement tomorrow.

Compensation

Compensation is an approach in which monetary benefits are provided to employees in exchange for work performed. Compensation may achieve several goals, such as assisting in recruitment, job satisfaction, and job performance. It is a tool used by management for many purposes to promote the existence of the company. Compensation may be adjusted as per the business goals, needs, and available resources.

Salary Benchmarking Best Practices

Usage of Data Sources

For salary benchmarking, one should refer to data sources that cover your industry, jobs, company sizes, geographic areas, and specific competitors for talent are critical to the success of your compensation benchmarking process.

Don't bother about perfect job descriptions

In compensation surveys, the job descriptions are not meant to be all-inclusive. Rather, they're more generic descriptions that best describe the main functions of a job, rather than the utilization of that job in a particular company. You should look for a benchmark job description whose content matches at least 80% or more of your internal job description, don't go for a 100% perfect match.

Don't Match Jobs with Just Job Title

Job description content is crucial; that's why you should not only match the job with the job title but with job description content. Similar roles, such as bookkeepers and accountants, are more clearly differentiated in their job descriptions. Roles that are near-identical, but with different names, are also recognized within job descriptions, such as Clinical Research Manager and Clinical Trial Manager. Hence, to identify your closest benchmark job match, it's important, to rely on the job description, not the job title,

Match Several Survey Jobs To Your Company's Jobs

Benchmark jobs, such as those in the HR Consultant, Finance, or marketing job families, are readily available in the compensation data, and these jobs can provide key pricing indicators for other, harder-to-price jobs. With slotting, you can use these benchmark job matches to inform the pricing for jobs that don't have a match.

Focus On Matching and Pricing Jobs

Don't match incumbents, do not try and match the capabilities of your employees with the high-level job descriptions in salary benchmark data sets. Rather, match based on the job description - the duties, skills, duties, and competencies of the jobs at hand. Your salary benchmarking process should help in establishing a pay range for your internal position that can be used to inform the pay of specific employees based on their own competencies, skills, and level of performance.

Hybridize Jobs

You can blend two or more jobs to create hybrid jobs. However, you should blend no more than three jobs per survey to represent your company's job. Don't forget that you're aiming for an 80% or better match for the job, and not a word-by-word description.

Final Words

Above are the effective ways to compensation benchmarking. These ways help managers to make informed pay decisions.