6, What is salary benchmarking and when is it needed

The newsletter on Human Resource expert opinion, for the Indian context

Salary benchmarking is nothing but a comparative study that any organisation would undertake to try and understand what is the market salary or what is the market paying for an individual who is performing certain level of skills in the company or the organisation.

The market we referred in the above definition, is the market we define ourselves, on the basis of certain factors which make us feel that the stated organisations are a competition to us either for business or for talent.

Salary benchmarking is a very important tool in deciding how much an organisation should pay an individual. Also, Salary benchmarking is an important and scientific method to ensure that an organisations salary budgets are not only competitive, but they are attractive enough to get the kind of talent that the organisation wants to hire and engage.

Salary benchmarking is an important and scientific method to ensure that an organisations salary budgets are not only competitive, but they are attractive enough to get the kind of talent that the organisation wants to hire and engage

Ideally speaking, an organisation should do salary benchmarking at least once in two years. Salary benchmarking should also be carried out whenever there is some major change that happens in the market.

These major changes can be a result of a new entrant (organisation), which is very disruptive, can be a result of some economic changes, which are very different than the existing systems, or they can be very simply a result of the organisation itself deciding that the kind of talent we wanted till now and the kind of talent that we want in future are drastically different, sometimes, also referred to as organisation restructuring.

.... major changes can be a result of a new entrant (organisation), which is very disruptive, can be a result of some economic changes, which are very different than the existing systems, or they can be very simply a result of the organisation itself deciding that the kind of talent we wanted till now and the kind of talent that we want in future are drastically different

These are the times when salary benchmarking should be under taken and that is something which is going to add value to the entire compensation decision making process of the organisation.

India HR Guide is aimed at discussing and shedding light on aspects in a crisp manner that organisations in India follow in the area of Human Resources. It is aimed at CEO's, MD's and line managers to understand how various aspects of Human Resources can help shape their organisations journey in India. Our industry leading expert, Mandeep Singh, offers years of accumulated knowledge from having advised clients across sectors, and spread across the remotest corner of the country. Let's make the workplace, a better place.

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