The war for talent is noticeable on today’s labor market. You have to show your best side in order to convince top talents of your value – during Recruiting, Employer Branding activities and internal culture – and to be able to attract them to your company. One of the things you must get right is competitive and fair compensation. A hygiene factor!
Hence, today more than ever:
Companies that know how to properly implement compensation benchmarking can set themselves apart from the competition.
What is Compensation Benchmarking?
For a company’s salaries to be competitive, appropriate and fair, every company should define their compensation promise. This includes not only the fixed and variable salary, but also the various benefits and performance programs offered to employees, to create a long-lasting employer-employee relationship. In human resources, compensation management has a special importance as it can have a strong impact on employee retention, the hiring process, company performance and team engagement. It helps ensure that a company remains attractive and competitive.
Why is Compensation Benchmarking important?
1. Finding talent
Compensation is one of the 5 most important reasons why talents choose a company. For this, the company needs a salary system that is adapted to the current labor market and is attractive. Compensation benchmarking helps the company to compare salaries and benefits internally and externally and thus facilitates the definition of salary levels and salary ranges.
2. Retaining employees
Once you have hired the right talent, you naturally want to retain them. A one-time compensation benchmarking is not enough. You should adapt the competition and salary increases for the existing employees, otherwise it is quite possible that they will migrate to a company that remunerates their value more appropriately to the current market conditions.
3. Improving job satisfaction
The key is transparency. Employees want to be informed, and this also applies to compensation. If you don’t show your cards, you convey fairness to the employee and show that the company cares about their financial well-being.
Our opinion on compensation benchmarking
Yes, salary is important and everyone deserves fair compensation. However, compensation is not the top priority for many talents nowadays. It’s much more about a healthy combination of fair compensation and an attractive working environment, appreciation and a great team. Money alone does not make an employee 100% happy. However, in order for the company to keep track of their budget and what they have to spend in upcoming months, obtaining benchmark salary data is an added benefit to the company.
You have difficulties comparing compensation on the current market? You want to compensate your employees fairly and attract new employees with your fair compensation?
Reach out to us now – we look forward to guiding you through the jungle of tools, rules and trust-based company culture!