Salary Benchmarking
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The process of comparing an organization's pay levels to external market data from salary surveys to ensure compensation is competitive for attracting and retaining talent.
## Salary Benchmarking
Salary benchmarking is the systematic comparison of a company's pay practices against external market data. It ensures compensation remains competitive and equitable.
### Process
1. **Job matching**: Align internal roles to standard benchmark positions.
2. **Data collection**: Purchase or participate in salary surveys.
3. **Analysis**: Compare internal pay to market percentiles (P25, P50, P75).
4. **Action**: Identify and address over/underpaid positions.
### Data Sources
| Source | Cost | Coverage |
|--------|------|----------|
| Mercer | $$$ | Global, comprehensive |
| Radford (Aon) | $$$ | Tech-focused |
| Willis Towers Watson | $$$ | Broad industries |
| BLS (US) | Free | US occupational data |
| Levels.fyi | Free | Tech companies |
| Glassdoor | Free | Self-reported, broad |
### Frequency
Best practice is to benchmark annually. In hot labor markets, quarterly reviews of critical roles may be necessary.