The job industry has undergone multiple evolutions in the last few decades. The growth of the internet along with more powerful, advanced, and intelligent machines has changed the “in-demand” job roles across multiple industries. Similarly, increased job mobility, the need for a work-life balance, global opportunities, the rise of the gig economy, and the ease of applying to multiple jobs at the same time, in turn, reduced the average tenure of employees at a single company.
As per some reports, the tech industry sees some of the lowest tenures with most employees spending less than a couple of years at a firm. Companies face high attrition rates since employees view their jobs as stepping stones instead of a destination. A common perception also relates staying at a company for too long to stagnancy. Most employees believe that switching companies is the only way one can have a healthy growth in salary.
Despite this, some of the best employers in the world see employees stay well over the average timelines, sometimes running into tens of years. These employees are the ones who can make big contributions and also take up leadership positions in the long run. The only way to ensure your business grows sustainably is to have the right people for a long period. This would ensure that there are always multiple views on the table from people who have seen the castle grow from the first brick.
Salary benchmarking is the only way to have your employees stay around for longer. This usually involves studying the job market and comparing the salaries that you are offering with those offered by similar companies for the same roles. In case your company has offices across multiple regions, you may need to do a region-wise survey as well. The process helps in calculating the competitiveness of your payroll structure and helps you make data-backed decisions on salaries, bonuses, and benefits.
Benefits of Salary Benchmarking
There are a multitude of benefits that arise from Salary Benchmarking in the long run. Also, while it may seem like salary benchmarking may hit your bottom line, not implementing it will impact your company as it grows and faces the heat from more competitors. Nothing affects a company more than disgruntled employees and a rising attrition rate.
Getting a shot at hiring top talent
A company is made up of people who believe in a shared goal and who work together to achieve it. Getting the best candidates in the market is a great way to cover your bases. Also, you will need some good leaders to pave the path and lay down the roadmap for the company. The only way all this would be possible is if you offer a decent compensation package along with a healthy work environment.
Retention of Skilled Employees
The only way to retain skilled employees is to pay them what they deserve. If you stick to the policy of paying more to get new employees while giving fewer hikes to current employees, you are likely to see a higher attrition rate. Companies today also offer flexibility in terms of work hours, better work-life balance, added benefits like family insurance as well as bonuses when the company does well. You will need to compare the combined benefits and extra non-financial flexibilities offered.
Better Financial Planning
You may think you are saving more by paying less to certain employees. This can be related to employees who have been working at your firm for years and haven’t had their salaries adjusted based on market standards. It can also be new joiners who were not aware of market rates or weren’t good at negotiating with your HR team.
However, in the long run, these employees, who handle critical responsibilities may end up jumping ship, and leave you with a bigger problem on your plate. High attrition rates would affect your business directly and bring down the numbers. Hiring new employees and bringing them up to speed would also end up costing you a lot. All of these would add to the uncertainty around your business and its financials. Using Salary Benchmarking to pay everyone what they deserve can enable you to predict your finances better and reduce the chances of critical resources leaving at vital points.
Legal Safeguards
Some of the popular cases regarding discrimination in pay in recent years were–
- Lily Ledbetter vs Goodyear Tires (2007)
- Dukes vs Walmart (2011)
- Google Gender Pay Discrimination Lawsuit (2017)
While some of these resulted in large payouts and others were dismissed, having to fight such lawsuits involves large legal expenses and erosion of trust. Salary Benchmarking would act as a shield and even if a case is ever lodged, you can prove that all salary decisions were taken using a numerical model without any involvement of “gut feelings”.
The “How to” of Salary Benchmarking
Salary Benchmarking depends mainly on the data source that you use. If you depend upon a DaaS provider like JobsPikr that provides you with clean data points from thousands of job sources, you are likely to make better decisions.
Define Benchmarking Criteria
First, you will need to define the criteria on which you will decide the salary. This can include the number of years of experience, job role, knowledge of certain tools, team size, and more.
Use reliable Data Sources
In case you are scraping or mining your data, you need to be careful that you are using the right data to make your decisions. Otherwise, you may do more harm than good. For instance, using data from a different region to compute salaries for your employees is a recipe for disaster.
Decide on a Data Consumption Strategy
While you may tap into the salary data from the market in real-time, you will need to decide on the frequency at which you want to collate the data and come up with a plan. In case you are just starting off using Salary Benchmarking for the first time, you are bound to make some mistakes and change the strategy over the first few months. With time, the dust will have settled and you should have a better plan on how you will be consuming the salary data to perform benchmarking activities.
Compare Compensation Strategies
Benchmarking doesn’t directly translate to comparing just salaries. A candidate may prefer a job with a lower salary that allows him or her to work remotely. You will need to compare compensation structures specific to your industry and region and then figure out what works best for you and your employees.
Regular reviews and adjustments
Performing salary benchmarking irregularly or only after critical resources resign, is a disaster in the making. You will need to ensure that reviews happen periodically and that changes are rolled out quickly.
Using JobsPikr’s built-in Salary Benchmarking tool can help you speed up the process and get down to business in a matter of hours. Our easy integration options and dashboarding systems can allow you to get to the tiny data points or get a bird’s eye view to quickly figure out what’s wrong and aim at course correction. Industries are evolving quickly and Salary Benchmarking is one of the most critical practices that you need to adopt to be at the top of the game.
