“We are observing the biggest change in the way we live and work for at least a century.”
These words from Reed Chairman and CEO James Reed underscore the challenge organisations face at present when looking to hire the professionals they need.
He adds: “This change is just one consequence of a shift which has resulted in more power and more choice being placed in the hands of working people – over the coming 12 months this will not only change the work-life balance of thousands of workers, but also the balance of the economy.”
The shift James talks about has already had a significant impact on the talent market in most sectors of the UK economy. There are far more vacancies than professionals available to fill them, giving jobseekers a multitude of options and making it imperative that businesses do everything they can to access talent.
One activity which has become critical in this competitive landscape is salary benchmarking.
What is salary benchmarking and how do you go about it?
Salary benchmarking is simply the process of comparing your compensation package with those offered at other organisations - particularly competitors.
Ideally you should benchmark salaries and benefits for each role in your organisation, as well as any new positions your company expects to recruit for in the near future. If this is too large an undertaking to be done efficiently, you could group positions based on seniority and benchmark based on these bandings – this can also help in assessing your organisation’s career development system.
The key to successful benchmarking is the availability of data. You need to find a data source which encompasses the variety of roles in your organisation to assess compensation across different sectors and locations. A greater quantity of roles in a data set allows you to more accurately assess the minimum, maximum and average salaries of a specific job.
Once you have the correct data, you should record it in a way which will allow you to easily repeat the exercise. You should then make comparisons with what you are paying/expecting to pay and adjust salary and benefits packages if you find your offer isn’t competitive when compared with those being made by other organisations.
Why benchmark salaries in 2022?
While salary benchmarking is always critical to support your talent attraction and retention strategies, it’s become even more important as we enter 2022.
Given the lack of available professionals, companies are battling to attract and retain talent which in many cases is increasing the value of salary and benefits packages. This not only impacts organisations looking to hire; employees already in roles are increasingly looking elsewhere if they feel what they earn isn’t competitive.
Which such a big shift in the jobs landscape, any organisation which hasn’t recently benchmarked its compensation packages will be using out of date figures – leading to their compensation packages becoming uncompetitive.
As well as remaining competitive, benchmarking also allows businesses to maintain sensible pay structures by illustrating the maximum they should pay. With the shortage of professionals creating increased competition, there are some organisations offering unsustainable increases which will be problematic in the long term, as Claire Harvey, Managing Director, UK Network at Reed, explains:
“The current shortage has created situations where organisations have entered bidding wars, with some employers counteroffering resignations with big salary increases.
“While this might help businesses retain one person in the short term, when other employees find out a colleague received a 15%-20% pay increase by looking for another job, this will lead to many doing the same.”
Understanding the changing salary landscape will help organisations navigate this environment. There may be some roles which are so critical and professionals so scarce that offering high salary increases could be cost effective in the long run. Benchmarking will help you to know where and how to allocate budget for your multitude of roles.
Why benchmark company benefits in 2022?
When benchmarking salaries, you may find that your organisation simply cannot meet the salary increases being offered by competitors. Therefore, it is also useful to benchmark the benefits other organisations make available.
While obtaining data on benefits can be more difficult than salaries, having some basis for comparison can help you to build attractive overall compensation packages, rather than solely relying on offering the very highest salary to attract talent.
“Getting the full picture when benchmarking compensation, including benefits, is important,” says Claire. “Jobseekers are increasingly motivated by the overall package, rather than just salary. If you can offer flexible working, some form of hybrid or remote working model, or healthcare insurance, for example, then your role may be more attractive than a competitor offering a higher salary but none of these benefits.”
With the job landscape shifting all the time, benchmarking total compensation packages, including benefits, will help you to offer overall packages which stand out from your competitors. While ‘the great resignation’ is in full swing in the US, the UK is experiencing a ‘great flirtation’, with professionals having the intent to move but not following through as yet. If this flirtation translates into widespread resignations, you need to have salary and benefits packages in place to attract those who are on the move.
What salary and benefits benchmarking tools should you use?
Reed understands the importance of salary and benefits benchmarking in supporting companies looking to hire the right employees to help them grow. Our annual salary guides are packed with information to inform you about the employment landscape.
The guides are based on data from 6.6m jobs posted on Reed.co.uk over the past three years. This breadth of data makes them the most reliable salary guides available, with the volume of jobs providing a more accurate reflection of the minimum, maximum and average remuneration for a wide range of positions. They also contain the previous two years’ data for each job, as well as projections for 2023, allowing you to track trends and plan for the future.
The guides are more than a simple list of salaries, they also feature in-depth insight from regional and industry experts, explaining trends you need to be aware of when creating compensation packages.
Given the importance of offering the right benefits to attract and retain professionals in the current climate, we’ve also surveyed professionals across all sectors of the UK economy to provide you with the information you need to formulate benefits packages which stand out. This includes the benefits professionals are being offered and what add-ons they find most attractive.
Reed’s salary guides are the benchmarking tool you need to accurately map your organisation’s salary and benefits offering. Download them now to futureproof your talent attraction and retention strategy.