Why is salary benchmarking important for a business?

Salary benchmarking enables companies to maintain competitive pay, manage labor costs effectively, and minimize turnover. It shows employers when to adjust wages to promote pay equity, attract talent, support compliance management efforts, and reduce legal risks associated with pay discrimination.

What factors should businesses consider when performing salary benchmarking?

When performing salary benchmarking, businesses must consider a number of factors, including geographic location, industry standards, company size, years of experience, education requirements, fringe benefits, and the specific skills required for the role. Businesses must also consider their financial position, growth stage, and overall benefits package when determining compensation packages.

How often should businesses conduct salary benchmarking?

Salary benchmarking is typically conducted annually or whenever new positions are added. Since market conditions can shift quickly, regular reviews help maintain competitive compensation. For roles with high turnover or rapid industry changes, businesses can consider quarterly evaluations.