Compensation benchmarking is the process of comparing the job summaries and descriptions at one firm to the same or similar positions in the industry to determine the current market rate for any given job.
There are a number of reasons for instituting a compensation benchmarking process, including: Creating salary ranges (also called compensation bands) to use in recruiting and to drive compensation changes for existing employees. Assessing compensation gaps, and identifying attrition risks stemming from those gaps.
What is compensation benchmarking? Sometimes called salary benchmarking, compensation benchmarking is a process HR professionals and business managers use to help them match an internal job with market pay data, salary surveys, or other compensation metrics to identify the market rate for each position.
Elements of Salary Benchmarking
The elements of salary benchmarking include compensation strategy, salary surveys and job matching.
Together, they help you find the correct data and then analyze and interpret it.
How can a compensation and benefits program be effective?
Education for your workforce is an essential part of any effective compensation and benefits program.
Regularly offer training on compensation basics for both managers and employees.
Cover concepts around equity and non-cash compensation, too.
How Do Employees Respond to Compensation Benchmarking?
Employees generally respond well to compensation benchmarking because it can keep salary and benefits packages transparent and equitable.
Employees appreciate knowing they receive the same pay as others in comparable jobs within and outside the company.
Therefore, benchmarking helps to retain staff.
However, employees might react negatively to info.
How to benchmark compensation & benefits?
The final step in benchmarking compensation and benefits is to implement and monitor the changes that you have decided to make based on the results.
You need to have a clear action plan, timeline, and budget for implementing the changes.
You also need to have a system for monitoring the impact and effectiveness of the changes.
How to Do Salary Benchmarking
You can complete salary benchmarking in three main steps.
These high-level steps include choosing data sources that line up with your company, aligning the data with your compensation strategy and creating salary ranges.
Read our how to do compensation benchmarking articlefor a more detailed, step-by-step process.
What Are Compensation Or Salary Benchmarking Best Practices?
Compensation or salary benchmarking best practices include picking the right competitors and jobs to benchmark.
HR teams should also work with department managers and use the resulting data to create a thorough, accurate report.
1) Consider the salary benchmarking big picture.Consider how benchmarking will affect salaries and bonuses, incentives, e.
What do you need to know about benchmarking?
You need to explain the purpose, process, and outcomes of your benchmarking project, and how it will affect your compensation and benefits strategy.
You need to be transparent, honest, and respectful when communicating the results.
What Is Compensation Benchmarking?
Compensation benchmarking, which is related to salary benchmarking, is the process of comparing salaries and benefits between organizations.
A company first defines duties for its roles and then matches those to jobs in peer companies.
What is salary benchmarking & analysis?
Use benchmarking and analysis to provide a data-driven basis for pay grades.
It is important to communicate to employees the criteria for various pay levels.
The elements of salary benchmarking include:
compensation strategy salary surveys and job matching. What Is Salary Benchmarking?
Salary benchmarking, also known as compensation benchmarking, compares one company’s job descriptions and pay ranges to similar jobs in other organizations.
The process shows the average or market salary for each job.
Benchmarking — and then using that data to adjust where necessary — is essential to retain staff and recruit new talent.
When benchm.
What Is The Purpose of Salary Benchmarking?
Salary benchmarking helps companies make data-driven decisions.
It removes the guesswork and reduces favoritism.
By setting a pay range for each job, a company can vary compensation according to staff skills, longevity and performance.
Salary benchmarking also ensures companies pay competitive market wages and helps them recruit quality candidates .
Why Is Benchmarking Important in The Compensation and Benefits functions?
Benchmarking helps with compensation budgeting.
This budgeting, in turn, helps with cost management.
A set salary/benefits budget allows room to reward valued talent.
Paying competitive wages also reduces costly staff turnover.
Compensation and benefits also contribute greatly to employee engagement.
When employees feel fairly compensated, they ten.
Why Should You Invest in An Integrated HCM Solution?
Salary benchmarking is a complex but vital part of HR and operations that can also boost morale and reduce costs.
But to ensure good results, benchmarking also relies on volumes of internal and external data.
To help make salary benchmarking more efficient, busy HR managers and staff need an enterprise-wide human-capital management (HCM) solution. .
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