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How does my pay compare to the external labour market?
You want this year’s pay review to be competitive and targeted, and the process to be efficient. You need to know how your pay scales compare to the external labour market. Having insight into market trends and effectively collating internal and external reward data will help target spending and help you recruit and retain high quality staff in a competitive environment.
Using pay benchmarking
Pay benchmarking (comparing your pay to the market) is an important factor in deciding what to pay your people. To effectively benchmark, you must make like-for-like comparisons with the external market. That means choosing the right comparator organisations and accurate job matches. Using a range of information, including multiple salary surveys and national statistics can also help you make more rounded decisions.
Benchmarking pay presents a few challenges for HR professionals to overcome, including:
- Selecting the right sources of information from a credible provider who understands your market well;
- Submitting your employee data before you can receive market pay information (this can be time-consuming and needs specialist skills);
- Collating and summarising both your employee data and external market information into a single structure;
- Taking account of the nature of work (function or family groupings) and employee seniority (level) within the organisation;
- Taking appropriate account of the factors driving executive pay, such as turnover, sector, reporting structure, board membership and so on;
- Deciding how to act upon market pay findings (for example, creating market-led salary scales to structure pay decisions);
- Agreeing how to communicate decisions to executives, line managers and other staff through transparent employee engagement; and
- Making sure all benchmarked data remains confidential, and complies with data protection and anti-trust legislation.
How Paydata can help you with benchmarking pay?
If you need support with pay benchmarking, we can help you to:
- Suggest the most appropriate sources of market information for your jobs, whether ours or someone else’s;
- Complete relevant surveys questionnaires (our own surveys are flexible and we often collect data via payroll downloads);
- Define ‘the market’ for each job (by geography, industry, specialism, seniority and so on), providing independent advice and expertise;
- Match your jobs to our data sources, third party sources and different methodologies;
- Collate information on more general pay and economic trends;
- Combine information from different survey sources or methodologies (including your own grades) into a single structure;
- Collate all the data into a single structure and develop salary scales, using our own bespoke salary software;
- Communicate the results across your organisation;
- Participate in HR Groups to obtain complementary information; and
- Comply with data protection and anti-trust legislation (we are Data Protection Act registered).
Paydata has been the leading provider of market information for many industries over the past two decades. As a result, we know the markets in which we operate very well.