A well-designed compensation structure helps in recruiting and retaining qualified employees, uplifting their morale, rewarding high performing resources and reducing the attrition attributed to wrong pay structure.
Market benchmarking, also known as market pricing, is the widely accepted remuneration methodology today, particularly with organizations that operate in highly competitive business environments. Market benchmarking is the act of matching a job and its duties to the compensation standards generally adhered to by other organization at par in the business operations for the particular role.
This process relies widely on valid, reliable survey data. We conducts compensation surveys on numerous executive, managerial, professional, clerical, technical, and production positions across board and industry verticals, which are perfect for integrating into your market benchmarking project. In addition, we produce industry-specific surveys aiming to help our clients.
Before undergoing a Market Benchmarking exercise, we recommend you contemplate a few questions.
First, who is your competition for Human Capital? The answer is as simple as understanding from where you draw applicants. Competition may be from employers in the same industry or geographic area, or those similar in size, sales revenue, or operating budget. The answer to this question may be different for different job categories.
Second, how do you want to pay your employees compared to your competitors? Do you want to lead, match, or lag the marketplace? This question goes beyond just base pay; you should also take into consideration incentives, overtime, stock, flexibility, career advancement, and benefits packages.
Thirdly. Matching Jobs -Consider jobs that match atleast 75 percent or more of your position’s KRA to be good matches. You may have to conduct a formal job analysis to gather the necessary information about your organization’s positions to ensure appropriate job matches are being made.
And Lastly Applying Data – Once data is collected from salary surveys, it’s imperative to age (or trend) the data, weight the data, and calculate a final composite base wage. For some projects, it may also be necessary to adjust data for geographic differences and/or make workweek adjustments to annualized rates. Once a final market value is determined for each job, individual pay ranges or an organizational salary structure are often created.
