The war for talents 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 factory!
Hence, today more than ever:
Companies that know how to properly implement compensation benchmarking can set themselves apart from the competition¹.
What is Compensation Bechmarking?
For a company's salaries, to be competitive, appropriate and fair, every company should define their compensation promise. This includes not only the fix 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 talents
Hygiene factor or more? Compensation is among the top 5 reasons why talents decide to work for a company. For this, the company needs a salary scheme that is adapted and attractive to the current labor market. Compensation benchmarking helps the company to compare internally and externally salaries and benefits and thus facilitates the creation of salary levels and salary ranges.
2. Retain employees
Once you have hired the right talent, you obviously want to retain them. A one-time compensation benchmarking is not enough. You should adjust the competition and salary increases for your existing staff, elsewise it is quite possible that they leave for a company that compensates their value more appropriately to current market conditions.
3. Improve job satisfaction
Transparency is key. Employees like to be informed, and this also includes compensation. Playing your cards close to your chest conveys fairness to the employee and that the company cares about their financial well-being².
What do we recommend?
Edl Consulting is the external HR team for small and high-growth companies that share our mission to create a motivating, modern work environment for talents. We are the one-stop HR support and offer operational and strategic support along the entire HR life cycle, including compensation benchmarking.
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!