Salary benchmarking is more important than ever this year, and here is why.
The financial recruitment landscape is growing increasingly complex. Skill shortages continue to present significant challenges to business leaders, and the rise of new technologies means hiring managers are constantly looking for new competencies in their ideal candidates.
Currently, 60% of leaders plan on expanding their financial teams; unfortunately, four in five businesses struggle to fill talent gaps. Business leaders are now under greater pressure to optimise their employee value proposition to attract and retain talent.
While many factors can influence a company’s ability to connect with candidates, the focus on competitive, fair salaries is growing.
In March last year, the Federal Reserve Bank in New York even found that the average lowest wage a candidate is willing to accept has increased to an all-time high.
Understanding the Concept of Salary Benchmarking
Salary benchmarking is the strategic process of comparing the salaries offered by roles in your company to those offered by competing organisations in the same location or region.
Many candidates already invest in salary benchmarking to ensure they’re pursuing roles in the industry that offer job satisfaction and the correct compensation for their talent. For business leaders, salary benchmarking is critical to building resilient employer-employee relationships.
Offering competitive remuneration helps business leaders attract the most valuable professionals to their team while also helping to minimise the risk of future turnover. Salary benchmarking ensures organisations can select pay packages that are fair and reasonable in the current economy while also helping to prevent leaders from entering a “bidding war” for top talent.
At the same time, it ensures companies can align their offers to the current state of the market. With rising cost of living concerns among employees and increasing skill shortages, around 86% of financial company leaders say they plan on raising remuneration in the years ahead.
Fundamentally, salary benchmarking allows companies to:
Ensure Fairness in Compensation Practices
Today’s financial candidates aren’t just searching for “competitive” salaries. They’re looking for employers they consider fair, equitable, and compassionate. 60% of employees say they’d be willing to change jobs to work with a company with a transparent pay structure.
Employees want to know they’re receiving fair compensation for the skills they’ve worked hard to develop. Salary benchmarking helps you guarantee your salaries align with the current market standards, ensuring you can make the most of your budget while remaining competitive within the financial industries. It helps employers to avoid overpaying or underpaying their teams.
This helps companies create compelling job offers and paves the way for a transparent company culture where team members feel respected, appreciated, and engaged. It also promotes internal equity, a crucial concept in a world where DEI (Diversity, Equity, and Inclusion) is becoming essential to retaining talent.
Attract and Retain Top Talent
Today’s financial candidates demand more from their employers. They now demand high skills and expect to be offered satisfying, supportive, and well-compensated roles as a result.
If your company’s compensation packages are competitive, you are more likely to attract talent with critical skills. Even if you cannot offer a higher salary than the competition, building on your compensation package with unique perks, such as access to development programs or flexible work, can give you an edge.
What’s more, salary benchmarking can help you retain the needed talent, reducing the long-term costs and complexity of hiring and training new team members. Suppose you know how to compensate your teams fairly and deliver the right remuneration. In that case, employees are likelier to appreciate you as an employer and are less likely to search for alternative roles.
Showing a commitment to fair compensation shows staff members that you have their best interests in mind.
Make Informed Business Decisions
Salary benchmarking is essential to making informed, effective business decisions. Access to salary data means business leaders can make informed decisions when setting the pay for new hires, creating new roles, and even considering promotional strategies.
It can even assist business leaders in navigating the complexities of salary negotiations. As more employees strive to ensure they’re being paid what they deserve, many are approaching business leaders with requests for a higher income or more benefits.
If you know what’s “fair” in the financial industry and how salaries are decided for specific roles, you can pave the way for a more effective conversation. This helps to ensure you can delight and retain employees without worrying about the financial health of your business.
Remaining Compliant with Regulations
All employers are subject to specific guidelines about compensating their employees. Labour laws and regulations like the EU Pay Transparency directive even require some companies to publish salary information for employees and future candidates.
Remaining compliant with the latest regulations doesn’t just help to protect organisations from fines; it can also help elevate the organisation’s reputation and brand equity.
Showing a clear commitment to complying with minimum wage laws, equal pay regulations, and other relevant statutes helps organisations build an employer brand that distinguishes them from the competition and improves their chances of positive hiring results.
Implementing Effective Salary Benchmarking Strategies
Though salary benchmarking is essential in 2024, it can be complex. Not every company has access to relevant data on salaries and competitive benefits. Additionally, fluctuating market conditions can make it challenging to ensure your payment packages remain competitive.
Without enough data and the right guidance, ensuring you’re not underpaying or overpaying employees for their skills cannot be easy. To improve your chances of success:
1.     Set Benchmarking Goals
First, establish what you’re working towards with your benchmarking efforts. Is your number one target to attract top talent, with irresistible job descriptions and posts highlighting your employee value proposition and demonstrating your commitment to equality?
Are you focused on ensuring internal equity and improving the culture within your company? Defining these goals will help you decide how to position your company as a competitive employer and how frequently you should evaluate pay packages.
2.     Find the Right Data for Your Benchmarking Strategy
Next, determine where you’ll search for the right data to inform your benchmarking efforts. Some government labour statistics and recruitment site data can be outdated when assessing your remuneration packages.
Ensure you carefully consider how often the data you’re using is updated, where it’s sourced from, and how relevant it is to your decisions.
Working with a leading financial recruitment agency, consulting services, and other experts can give you a clearer and more comprehensive view of the market. These companies can also assist you with determining which internal data to use when comparing compensation options.
3.     Analyse Your Data Carefully
Once you’ve collected the right data, it’s time to analyse. Look for instances where your salaries may be too high or lower than current market rates. Define salary bands to help clarify your remuneration options for each role.
Salary bands can help ensure employees are compensated fairly while also maximising your budget. Bring key stakeholders from HR, finance, and leadership groups to your teams to ensure you’re all aligned on how the compensation strategy should work.
Additionally, make sure you’re prepared to regroup and reassess your salary structure in the months and years ahead based on market changes and fluctuations.
The Power of Effective Salary Benchmarking
Salary benchmarking can initially seem complex, as there are many factors and data points to consider when making the right choices for your team. However, a comprehensive approach can help you remain competitive in a complicated hiring market.
Employers who prioritise fair compensation packages and use data-driven strategies to decide salary structures are more likely to attract and retain critical team members.
If you’re struggling with the salary benchmarking process, contact Rebus Recruitment for insights from a financial recruitment leader who will help you thrive in the current market.
Thanks,
Rachel
Â
About Rebus Financial Recruitment
Rebus Financial Recruitment provides a specialist and focused recruitment service to its customers, ranging from various organisations, including SMEs, to large PLCs.
We strive to offer both the client and candidate a seamless recruitment experience. Using our expertise, we get to the heart of employer and employee needs, and, in doing so, we match the two perfectly.
To learn more, contact one of our team members today or call us at 01282 930930.
