Salary Benchmarking: Navigating Competitive Pay Markets in 2024
V7 Recruitment
Specialist Recruitment Consultancy Dedicated To Growing Businesses And Furthering Careers!
There is no denying that the turbulent economic landscape has put pressure on the UK workforce.
In fact, research has shown that 57% are worried about their salaries due to the increasing cost of living crisis resulting in many looking to change roles to keep up with inflation.
With it being reported that there were 900,000 live vacancies advertised in February alone this year, Salary Benching is an essential tool that organisations should use bi-annually, if not annually, to review, adapt and evolve their salary and package offerings if they want to attract and retain top talent.
If you are new to salary benchmarking or haven't conducted one for a while, this information will allow you to make data-driven decisions that'll benefit your organisation in more ways than one.
So, let's explore the benefits of salary benchmarking and what considerations you should take before beginning.
Salary Benchmarking Definition
The process of evaluating a company's internal job salaries based on their external value. It involves collecting data from surveys, HR documentation and industry reports to compare your offerings against similar jobs in other organisations to establish a 'market rate'.
As 44% of organisations lose employees because they don't provide competitive salaries, the aim of Salary Benchmarking is for you to match - or even exceed - the market rate, especially in industries that fight for top talent.
Benefits of Benchmarking
Contribute Towards A Fair Work Environment
A term that has become more frequently used over the last decade, a 'fair work environment' encourages productivity and employee retention and is achieved by taking into account multiple elements, such as salaries, opportunities, support, and more.
Salary Benchmarking promotes fairness and transparency within an organisation as it compares internal salaries to competitors with the goal of offering equitable compensation packages to all its employees; in turn, this contributes to a positive work environment by promoting trust and engagement between employees.
A benchmark will address pay discrepancies within an organisation and ensure employees in similar roles and with matched experience levels are paid equally, and importantly, remove any connotations of favoritism.
Reduces Employee Disengagement
If you're feeling the pinch of trying to make your salary last each month, then you're more than likely not going to feel engaged in your role. The feelings of being undervalued partnered with the desire to secure a higher-paying role can mean employees may not be giving their all to their role; which has multiple financial and cultural implications.
Establishing a fair pay practice can lead to a more motivated and committed workforce, which in turn, reduces the negative impacts of low morale and turnover.
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With the cost of replacing an employee costing on average between ￡30,000 to ￡100,000 depending on seniority, ensuring your employees are engaged in their roles through validating their worth in salary and benefits is a positive financial investment.
To Consider
Lack of Accuracy
When conducting your salary benchmark you need to ensure that the data and sources you are using are:
There is no point putting a case forward to amend salaries and packages if they are not competitive with the industry right now!
For example, if you're using an Online Calculator, the sum being used may be outdated. This can lead to unrealistic or inaccurate comparisons which do not reflect the current market conditions.
To Overcome This...
You should use multiple sources of salary and package data to cross-check them for consistency and validity.
Right now, we're conducting a Construction Salary Guide to help you Salary Benchmark!
Complete V7 Recruitment's Construction Salary Survey and Discover Salary and Benefit Benchmarks for Property and Construction Professionals in the UK in 2024.
From the results collected, The Ultimate Construction Salary Guide will be produced and shared for free industry wide.