Salary benchmarking

What is Salary benchmarking?

Salary benchmarking is comparing what a company pays for a role against market data for similar roles, to check whether pay is competitive and consistent.

It answers two different questions at once: are you paying enough to attract and keep people, and are you paying similar roles consistently within the company. The second one is where internal pay data - who earns what, and since when - matters as much as external market data.

Doing this well needs accurate compensation history: current pay for every role, and how it changed over time, in one place rather than scattered across old offer letters and spreadsheets. That is the internal half of the exercise; the external market data comes from salary surveys, not from HR software itself.

Related terms

• Compensation history and effective dating
• Gross vs net salary