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Why Your Organization Should Use Salary Benchmarking

October 14, 2023
in Business
Why Your Organization Should Use Salary Benchmarking
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In a growing number of states and countries, employers are not allowed to ask job candidates’ salary history or even their salary expectations. That means employers must find new ways to determine appropriate compensation. A key solution lies in salary benchmarking — using aggregated market data to establish competitive pay rates. Recent research in collaboration with a leading U.S. payroll processing company revealed that access to robust benchmarking tools doubled the probability of firms setting the “right” salary. Data sources vary from government-released data to crowdsourced information on platforms like Glassdoor. Despite the availability of various tools, ensuring that salary decisions align with market trends is crucial, not just for compliance but also for retaining talent. As pay transparency grows, leveraging high-quality benchmarking sources effectively can optimize employer’s wage expenses and bolster employee retention.

Recent transparency policies across several U.S. states, like salary history bans that prevent employers from requiring candidates to report their compensation or even their salary expectations, have heightened the focus on fair salary practices in the workplace. As a result, there’s an increased demand for strategies to determine appropriate compensation. A key solution lies in salary benchmarking: using aggregated market data to establish competitive pay rates.

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Copyright for syndicated content belongs to the linked Source : Harvard Business – https://hbr.org/2023/10/why-your-organization-should-use-salary-benchmarking

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