How and When to Benchmark Salaries

 In Salaries

When companies start out, they often make pay decisions intuitively, based on the leader’s personal knowledge and experience, and that can work nicely…. for a while.

Problem is, salaries are a moving target, and you need to stay on top of the changes or you lose ground, which in turn affects your ability to recruit, retain and ultimately get the results you need.

As more people get involved in decision making, your board looks more critically at that giant “salaries and benefits” line and employees become increasingly curious as to just how you decided on their salary increase. When you need something more defensible to guide and justify budget requests and individual salary decisions, it’s time to think about benchmarking.

This is where benchmarking comes in – everybody’s doing it…but are they doing it well?

What about free data? The saying “you get what you pay for” is often true here.  Most free data is questionable at best, so do your homework before signing up.

Use these questions to evaluate relevance, and integrity of salary benchmarking data:


  • Participants – Similar organization size, geography, industry sector, etc.
  • Titles are not enough! Are the jobs well defined and similar?
  • Full range of statistics reported?


  • How is your data protected?
  • How do they clean the data?
  • Is the math right?
  • Is data collected at least annually, directly from employers? Aggregators dilute the data too much and use algorithms to make up missing data.


  • Is there support available?

Benchmarking compensation effectively can protect you from lost productivity and the steep cost of resignation. And let’s not forget that they can also protect you from paying too much, which let’s face it, comes with its own set of issues.