Salary Benchmarking Is a Vital Tool When Hiring Employees
Salary benchmarking, also called compensation benchmarking, is the process by which internal job descriptions are matched to external jobs with similar responsibilities to identify the market rate for each position. When creating a new position complete with job responsibilities and a corresponding salary, it is important for those working in human resources to perform these market assessments and salary comparisons efficiently and accurately. Many factors such as geographic location, company size, and education level factor into the final salary, and all must be considered before filling the position.
Why is Salary Benchmarking So Important?
Before hiring employees, you first need to build a foundation. And if that foundation is rotten, then you've already set yourself up for failure. If done incorrectly using bad market salary data, you could have a hard time attracting the best candidates, or risk looking foolish by advertising a position with a salary range completely out of whack with the rest of the market. If you hire someone and a salary benchmarking mistake is later discovered, any adjustment (especially downward) could create employee dissatisfaction, poor employee engagement, and lead to higher turnover costs if that employee has to be replaced. This makes salary benchmarking a vital part of the hiring process.