Why compensation benchmarking

Compensation benchmarking Without a competitive pay structure, companies struggle to attract and retain top talent. Fact-based insights to help you make informed decisions Aon Hewitt's reward team relies on its fact based methodology to help clients design, develop and deliver effective reward programmes that establish a direct connection between the organisation's goals and objectives and an employee's focus and actions.

Flexible or customised solutions Aon Hewitt can assist you as much or as little as you would like in your remuneration benchmarking exercise, drawing from our experience, and wealth of market data. Get in touch Boon Chong Na. Zihao Chua. We can also help you with Employee engagement Data and benchmarking.

For employers People and performance Compensation and benefits Mergers and acquisitions Small business Financial wellness and retirement. Many of our clients conduct a benchmarking project to have a competitive advantage with their compensation strategy and ensure they have fair and equitable pay practices. Let's Talk! Categories Follow Us. I hope this post will help you get a big picture overview of what salary benchmarking is, why employers need it, and the implementation involved What is compensation benchmarking?

Why is compensation benchmarking important as a "best practice"? How to Do Compensation Benchmarking If you decide to conduct a salary benchmarking project internally, it is very important to use reputable salary surveys. Benchmarking In-House Vs.

Evaluate is the first stage of the benchmarking process. For the first step, businesses should gain the following outcomes: defined the purpose and objective, identified resources, understood the role of job evaluation in your process, and planned salary benchmarking for these evaluation steps.

In the second stage, businesses need to identify the approach ways and process for your benchmarking and decide on the definitions of all relevant metrics. In the comparison step, businesses have to select relevant benchmark organizations, identify suitable data sources, collect data, and take analysis from this source.

These steps help businesses find how to adjust pay to eliminate significant differences from market rates, and also produce total reward statements. At the end of the salary, the process is implemented monitoring processes, tested the success of the benchmarking, and apply it to the payment system in the internal team. Paying enough not only helps businesses get easier in recruiting and retaining their staff but also ensures that they are not paying more than they have to which effect directly in businesses budgets.

Once you've finalized your internal requirements, you'll want to look out to market to select a relevant data source for your business. Compensation data comes in a variety of flavors, including survey data , HR-reported aggregate market data , and even employee-reported data , and you'll want to assess which type of data is a best fit for your business - and for this position.

Additionally, if you're pricing a highly specialized position or a hot job in your local market , you may want to look at supplemental data sources to more accurately assess the true price of the job.

Finally, you'll want to compare the jobs and job descriptions in your market data to your internal job description. Where are the similarities? Which benchmark jobs are a close match? Finding the best match for your job is critical to an effective salary benchmarking exercise. As you look to begin a salary benchmarking process, here are six salary benchmarking tips to consider:. How you choose to price your jobs will determine how you pay your employees.

This may help save money and allow room for salary negotiation while still paying new hires equitably. As you begin to price the jobs in your organization, consider grouping similar jobs together to drive additional analysis and improved decision-making around prices for all jobs in the group.