3 ways in which salary benchmarking can pivot your talent strategy in 2021
The pandemic is seeing organisations around the world grow, transform and quickly adapt to change. Those who manage to embrace this change and effectively take advantage of the opportunities it presents will succeed.
Future ready leaders know that talent is one of the most crucial components of creating a successful and sustainable work machinery. The pandemic has impacted the HR ecosystem drastically where all interactions must be digital in the absence of interviews, assessments or in person meetings. On the one hand, there are clear advantages like access to borderless talent pools while on the other hand there is some struggle in onboarding & integrating & scattered teams. But all of this combined together means that the entire process of Talent Acquisition must now be formulated and supported in a way that ensures promising outcomes to achieve the goal of getting top talent of any given industry.
The above necessitates a need for frameworks that can offer strategic value to an organisations’ Talent Acquisition plans.
Compensation, remuneration or salary as we most commonly know it as, is one of the most critical factors in the people strategy of any organization, and something that HR leaders across organizations focus on getting right. At a juncture that is uncertain but requires agility, Salary Benchmarking can prove to be a great exercise to stay on top of the Talent Acquisition game. There are distinct advantages that a Salary Benchmarking exercise can provide to organisations, especially amidst such tumultuous times.
#1 Widened Scope of Hiring
Organizations have widened their hiring perspective as HR Leaders are now looking at talent in other industries. As an HR leader if you find yourself in a tight talent market, start looking for relevant talent in other industries. When organisations are aware of the skills shortage and the global war for talent, it is advisable to consider candidates who would do really well but don’t have the ‘industry experience’ chalked out in the job description. And a competitive pay framework will help you attract and retain the best identified talent to gain an edge over competitors.
#2 Bring a mean shift in team performance
It is essential to develop an integrated reward system to ensure an effective compensation policy and continuously build upon employee engagement. Beyond fixed salaries, Salary Benchmarking also gives insights into other variable components such as incentives, commissions, bonuses, profit sharing and stock options. Studying these carefully for your competition can reveal insights into the structures and quantum of variable pay that will lead to a mean shift in the team’s performance. By getting a clear and detailed picture of existing competitors and the market, one can understand where one’s own organisation is lacking and has the scope to excel.
#3 Improved Internal communication
External salary benchmarks can equip managers with insights needed to arrive at the right salary increases and have more transparent conversations during annual appraisal discussions. According to studies, only 30% of all employees are completely satisfied with the communication related to salary increase. By ensuring transparency and fairness through the whole remuneration system, HR leaders can interact more proactively and positively with their employees. Additionally, this also helps counter many long-term retention risks before it becomes a bigger business challenge.
In Conclusion
Companies across industries must take responsibility and be accountable when it comes to employee benefits and compensation. In an industry survey, around 80% of HR leaders reported that their organisation spends some money on Salary Benchmarking at least once every 2 years. Companies spend this money because the benefits of this exercise far exceed the cost involved.
While conducting a salary benchmarking exercise, one must be careful that one is consuming the relevant data i.e. at the pertinent levels and from the peer set of interest, and not just an average of averages. A cohesive Salary Benchmarking exercise can help pivot an organization’s Talent Strategy, especially amidst the uncertainty of the current pandemic.