Paying Fair Wages: Attraction and Compensation Benchmarking
Paying fair wages is more complicated than you think. Do you know the market rate for your Sr. Software Developers? What about your SDETS, AE’s, Admins, Analysts, Accountants, VPs, etc.? What about potential talent – do you know what salary to offer to attract top performers?
If you’re scratching your head and are thinking ‘kind-of’, then it’s probably time for a comp review and analysis of your team and open jobs. Compensation benchmarking is an absolute must for your organization, and without it you’re driving blind, and to remain competitive, to attract top-talent, and to maximize retention, you have to know the market value of the positions within your company as well as what to offer incoming candidates.
Ok, so how do I benchmark my employee’s compensation versus the market rate for this position? Well, you’re going to need some technical tools and perhaps a person who knows their way around the compensation and benchmarking world. There is a wide variety of benchmarking services out there from 3rd party consultants to online benchmarking programs like: Payscale.com, Salary.com, LinkedIn Salary, Indeed, and Bureau of Labor Statistics (free). There are pros and cons to each of these services, and each service varies in cost, ease of use, database robustness, and filtering capabilities. Do a bit of research to find out what tool(s) is best for you and your company. Maybe (wink wink) have a company do an in-depth compensation and benchmarking analysis for you!
3 Common Questions To Ask for Paying Fair Wages
Here are some common questions we ask our clients for each job we’re benchmarking.
- What labor market do you operate in? We look at the location scope, city, state, avg. size of competing orgs etc.
- For the job being benchmarked: What is required from the position’s experience or education? What key skillsets, technical certs/advanced degrees are required?
- Is the employee a supervisor and if so, what number of people will be supervised? We do consider the highest level managed or signing authority, etc.
Once you gather all of the relevant data inputs that you need to perform a solid benchmarking analysis you then use your selected online tool + your gathered data to compute your benchmarking report. Most of the online tools will provide you with 10th, 25th, 50th (median), 75th, and 90th percentile data for TCC (total cash compensation), Base Salaries, Bonuses, Profit Sharing, and Hourly Rates. Some reports will even show you market trends and how compensation varies with skills and experience, location, and training and education – I know, pretty cool stuff.
It’s certainly a lot of information to digest at first, but it will definitely help you understand if you’re over or under the median compensation for a certain job in a certain location.
Having this type of data at your fingertips allows you to have a broader discussion about company compensation strategy and talent acquisition and retention. What salary percentile do you want to be around and for what reasons? If you can’t compete at the 90th percentile what else can your company provide to make an offer attractive? An employee asks for a raise – you now are armed with the right data to make a data-based decision. You may realize that John in Sales is way over market value – does his performance demand this type of comp?
There are many questions that benchmarking analytics answer. And to sign off, I’ll leave you with the words of Peter Drucker, “If you can’t measure it, you can’t improve it.”
Give us a shout if you’re ready for some Benchmarking Analysis. We’re here to help!