Salary Benchmarking in 2023

I promised to do a blog on salary benchmarking before the end of the year, yet I’ve been a little slow in getting around to it. In truth, December was a good time to review and if you have then well done, if you haven’t then you must before the end of January.

Typically, salary doesn’t tend to be the number one motivation for a candidate looking for a new role. This would be company culture, opportunity, technology, training etc. Salary should always be a secondary consideration however with the current cost of living along with interest rates affecting mortgages, salary has become a primary motivation.

Over my 17 years in recruitment, typically once a year, I will have an email from HR with 20-40 jobs within IT and Tech. Bulleted job titles, junior to senior, asking for me to confirm the market rates.

I’ve refused to action these emails for the past couple of years. Instead, I’ve taken the time to work closer to my clients, face to face when possible, to help understand the value of their staff in the market and focusing on retention before growth.

That might sound strange coming from a recruiter but typically tech intellect work as a sole agency and it’s a value add as over 75% of our permanent placements remain in the role for at least 2 years.

TIP: While the general market value will give you a good idea, it’s important to bear in mind that every organisation is different - and this should affect the way you benchmark your salaries.?

Establishing these benchmarks can be tricky. Do not work off job titles. Organisations need to be aware that a mid-level Software Engineer in one business is a Senior in another, and maybe even a Principal in another.

Organisations must consider their own size, benefits, job scope, technical knowledge, soft skills and ways of working to give an accurate benchmark.

Career progression frameworks are often overlooked, but they are super important within technology and more and more businesses are realising it. I cannot recommend them enough as it helps keep employees engaged and motivated. Additionally, it helps prevent bias and possible inequalities.?

So then…

Why salary benchmark?

When determining employee salaries, external factors can sometimes influence this process. They can inadvertently give rise to pay inequalities within the company.

This situation can create discontentment among employees and even prompt some professionals to leave the company to accept a better offer. Setting up a career progression framework throughout the organisation is the best way to avoid this situation.

There are several reasons for this…

The company’s salaries will be fairer

Salary benchmarks help you establish a fair and coherent compensation system within the organisation.

Bias is kept to a minimum

It’s a useful tool for eliminating/reducing bias or discrimination related to race, gender or religion, for example. If the organisation has a clear scale for setting employees' salaries, then unconscious bias towards employees, and potential employees will disappear.

Employee motivation, commitment and engagement will increase

Being paid a fair salary is a major concern for any employee. What's more, it's one of the factors that'll encourage them to stay in the organisation raising their commitment to the organisation and their work.

Helps you budget for labour costs

The ability to make your payroll budget more efficient is another great advantage of implementing a career progression framework. As a result, the HR department will be able to make a reasonable estimate of the payroll costs for each department and team. It will also make recruitment decision-making a lot easier.

What’s considered in salary benchmarking??

For example, let’s say a two Data Engineers with 10 years’ experience, same qualifications and working at the same companies. The salary range could be up to ￡20k p/a different. Do they have experience in…

1.????Mentoring juniors??

2.????Involved in the hiring processes?

3.????Client facing?

4.????Working with senior stakeholders?

5.????Involvement in vendor selection??

6.????Representing the organisation at company events??

7.????Leading workshops??

8.????Proactively identifying areas of improvement??

9.????Championing and driving that initiative?

10. Being a key player in driving the organisations culture forward??

These are just some things to take into consideration when assessing salaries. If Data Engineer #1 ticks every box, they’ll be worth a lot more in the market than Data Engineer #2 (and Data Engineer #2 needs to be aware of that!).

When it comes to retention, you need to look at the growth opportunities you’re affording your existing employee’s as well as the frequency of salary reviews.

Please forget the yearly reviews, and even 6 months reviews. This should be reviewed every quarter if you want to retain the talent in your team.

In conclusion

As a recruitment agency, our job goes far beyond placing candidates - we work on retention and education. We’re always happy to discuss budgets and salaries, as well as help you establish a strong career progression framework detailing salary bandings.?

The market in 2022 was bonkers, we saw an over 20% increase in salaries within the tech industry.

This is an incredibly difficult thing to explain to your Finance Director with the economy as it is right now and all the talk of “recession”.

Understanding Finance Directors, CTO’s, Hiring Managers and candidate’s perspectives, and the challenges they face in their individual job, is something not a lot of people can say they have experience in, but that’s our business. We get it, and we understand the importance in being able to find common ground - not wanting to lose your great staff or lose out on a fantastic candidate.

If you’d like to discuss how career progression frameworks are changing the industry and how it can help your team feel free to reach out to [email protected].

But in the meantime, make sure a review is on the to do list.