25 Jun Compensation Benchmarking Software
Compensation plays a major role in the retention and attraction of talent in an organization. There are many tactics enterprises can use to ensure they’re paying fairly and competitively, one of the most effective of which is compensation benchmarking. Here, we take a closer look at the practice, along with compensation benchmarking software, an innovative tool designed to help HR professionals.
What is Compensation Benchmarking?
Also sometimes referred to as salary benchmarking, Salary.com explains that compensation benchmarking is the practice of determining which internal job descriptions can be compared to external positions with similar responsibilities. This then gives the employer the ability to identify the market rate for each job.
Why is It So Important?
As SHRM reports, compensation is typically the largest expense for an organization. It is therefore critically important that employers get it right. By incorporating reliable compensation data into their pay decisions, compensation professionals can establish pay levels that are in line with both market rates and the company’s compensation philosophy.
The Challenges of Benchmarking
While benchmarking tends to be one of the most consistent approaches for determining pay levels, it isn’t without its challenges. Determining appropriate sources for accurate, up-to-date compensation information is one of the first hurdles employers must overcome. While there are many free options available online, self-reported data is not always as reliable as information produced by rigorous survey processes. Sources like the U.S. Bureau of Labor Statistics (BLS.gov), consulting firms, and industry and trade associations are among the leading sources for market data.
Yet, even once all of the information is procured, employers then face the challenge of analyzing the data. Factors like differences in geography and company size must also be accounted for.
How Compensation Software Helps
Compensation planning software makes benchmarking simple and efficient. You can configure the platform and tailor it to your organization’s specific approach to market pay, using automated features to collect, analyze, and integrate relevant data. As a result, your organization can optimize its compensation budget and ensure pay is both equitable and competitive.
HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.