The Importance of Salary Benchmarking for Recruitment During the COVID-19 Pandemic
The COVID-19 pandemic severely impacts the financial stability of businesses worldwide, pushing them to realign their talent management strategies to keep their top employees and avoid retrenching them.
To help retain your top employees, Salary Benchmarking is a talent management strategy you can use. It will help you provide the most competitive salary packages in your industry, attracting more highly-skilled candidates to work for your company.
Additionally, Salary Benchmarking can be advantageous for your business as it decreases attrition rates and increases employee satisfaction. Which, ultimately, will help you maximize your company’s finances during the pandemic.
What is Salary Benchmarking?
Salary Benchmarking, also known as compensation benchmarking, helps employers make attractive salary packages for a particular job position by conducting salary surveys and comparing internal and external job descriptions.
Salary Benchmarking also helps you determine if you are paying below or above market average. This will allow you to assess which part of the salary spectrum your offered compensation should sit.
The Importance of Salary Benchmarking
Salary Benchmarking is an essential talent management strategy that helps companies determine the most competitive and attractive salary package they can offer to their employees through collated data. By providing such salary packages, your employees are at lesser risks of being poached by your competitors.
Benchmarking can also help your company maximize its talent management costs as it lessens employee turnovers, which in turn mitigates your company’s financial difficulties during the COVID-19 pandemic.
It also keeps stakeholders up-to-date with the latest salary trends in your industry.
How Does Salary Benchmarking Work?
The Salary Benchmarking process consists of four stages: 1) determining your compensation philosophy; 2) conducting and assessing salary surveys; 3) comparing internal and external job descriptions; and 4) collating and applying the data acquired. These steps will help you determine your final compensation package for a particular position.
Companies mainly use Salary Benchmarking as a tool to remain competitive in their industry and discover the most attractive compensation package they can offer to their employees. Besides these reasons, they also utilize it to:
- Increase employee morale and satisfaction
- Reward and encourage peak performance
- Recruit and retain qualified and high-performing employees
- Reduce turnover and encourage company loyalty
- Achieve internal and external equity
Retracting and retaining your top employees can help your company maximize its finances by avoiding the cost of turnover, especially during COVID-19.
The Benefits of Salary Benchmarking
Salary Benchmarking benefits both the employer and the employee. In the employer’s case, it can help decrease your company’s attrition rates, keeping your high-skilled employees away from being poached by your competitors.
These employees likely remain satisfied because of the salary packages offered to them, resulting in higher engagement and productivity rates. Companies with high employee engagements are 21% more profitable, producing better quality outputs than those with lower engagements.
Additionally, salary benchmarking benefits employers by:
- Becoming a top competitor in their industry
- Maximizing plan designs for financial gain
- Attracting ideal candidates
- Maximizing talent management costs
Taking these aspects into account will help you determine your goals as an employer when you incorporate Salary Benchmarking into your talent management strategies.
How Salary Benchmarking Affects Employees
As mentioned in the previous section, one of the main reasons for high employee retention is by providing the most attractive salary package. Employees can easily compare their current salaries with your competitors, assessing which salary package would benefit them better and focusing on factors such as:
- Salary increase
- Salary range
- Benefits (leave with pay, healthcare benefits, loans, etc.)
- Hours expected to work
- Work environment
- Work-life balance
Salary Benchmarking can help you compare and incorporate these factors into your final salary package, reducing the probability of losing employees to competitors.
With the COVID-19 pandemic at large, including incentives such as hazard pay, medical plans, and work-from-home arrangements for your employees will also put your company ahead of the competition.
Realign Your Recruitment Strategies With Salary Benchmarking
Salary Benchmarking is a vital tool for recruitment to retain top-performing employees and attract ideal candidates. By keeping your employees satisfied, your company is likely to perform better and be able to maximize profit margins.
Consulting with recruitment and talent acquisition firms can also help guide your company’s Salary Benchmarking process. These firms can help provide up-to-date information on the current salary trends in your industry. They can also help with candidate profiling if you wish to recruit highly-qualified individuals for your company.