This article was written by Paul Holcroft, who is the managing director at Croner.
Understanding what your employees should be earning is a major part of the modern business world.
And salary benchmarking is one of the best ways to go about keeping staff with you for longer.
In this feature, we look at how the right approach to wages will lead to a happy workforce, plus the chance for your business to be one step ahead of your competitors.
What is it?
A salary benchmarking database helps compare wages across your industry. The process ensures you don’t offer pay that’s excessive or too low, which could either force away top talent or overpay them. As a strategy it’s important for your recruitment efforts. The job specs you place online need to capture the attention of talented individuals—and to do that you have to get the industry-standard wages correct. You can also develop tactics from benchmarking, such as raising the wage of a role above industry standard to attract talent away from your competitors.
This can be useful as, otherwise, potential employees have no incentive to join your organisation. If you approach them and offer the same wage as their present position, they’re unlikely to commit to your business.
Why do your staff members leave?
A key point to consider is the reason for a high turnover rate—or a talented employee leaving. One of the most common reasons is due to incremental wage increases. Even if they’re relatively happy in their work, they may look to move elsewhere to find a slight improvement in their monthly pay.
These are some of the more common reasons for employee departures:
• Boredom: Even if they receive strong wages, some staff members can tire of their role after several years. You can combat this with perks such as wage increases, flexible working, or new duties (such as a promotion).
• Dislike of a boss or colleague: If they’re clashing with another member of staff, or find their employer difficult, they may look to leave. You can take a look at your company culture to improve on these aspects, as well as promoting greater emotional intelligence to stop issues developing.
• Overwork: If the workload is causing issues such as presenteeism, this can lead to burnout. To stop this, you can look at introducing policies that promote a better work-life balance.
Using salary benchmarking for higher retention rates
A lot of businesses seem to accept there’ll be a high turnover and focus on other issues. However, with the right strategy you can keep your best employees with you for longer. There are many tactics so use, such as ensuring your company culture is strong, you offer salary reviews, and provide flexibility for a better work-life balance.
But you can launch new starters into their roles with salary benchmarking. It starts by attracting them with a benefits packet and wage. You start by performing industry research—job sites can provide insights into what most businesses are offering.
This helps to:
• Identify room for improvement in your business: The comparison of your sector will showcase market trends and what you can do to match your competitors. And this can keep your wages competitive to ensure employees stay on.
• Create business USPs: Stand out from the competition with regular salary benchmarking reports. You won’t lag behind the market, you’ll be ahead of other businesses with your understanding of what you should be offering.
• Take advantage of staff benefits: Whether it’s flexible working time or a company car, including the right perks can ensure you attract and keep your employees with the types of benefits they now expect in the modern era of business.
Considering the implications of a competitive salary is as simple as looking across your industry and seeing what you can do to meet—or exceed—the norms.
And the right approach on a long-term basis will ensure your business is meeting the requirements to keep your employees happy, regardless of the department.
Written by: Paul Holcroft, who is the managing director at Croner.