How to choose the best salary benchmarking tool
A salary benchmarking tool can help your organisation ensure competitive pay, equity and more. Learn how to choose the best one.
Published: 3 December 2024 | Madigan Naylor, Sr. Product Marketing Manager at Brightmine
In today’s competitive job market, attracting and retaining top talent hinges not just on company culture and benefits, but also on offering competitive compensation packages. For HR professionals and managers, making informed compensation decisions requires access to accurate, up-to-date compensation data. One of the most effective ways to ensure your organisation is paying employees fairly is by utilising a salary benchmarking tool. But with so many options available, how do you choose the best one?
In this blog, we’ll walk you through how to evaluate salary benchmarking tools, highlighting key features you should look for when selecting the right one to support your compensation strategy and HR management needs.
In this resource:
- What is a salary benchmarking tool?
- Why salary benchmarking is crucial for every role?
- Benefits of salary benchmarking tools
- Key features to look for in a salary benchmarking tool
- How to choose the best salary benchmarking tool
- Popular salary benchmarking tools to consider
- Considering a salary benchmarking tool?
What is a salary benchmarking tool?
Salary benchmarking is the process of comparing your organisation’s compensation data against industry standards and competitor offerings. It helps ensure that the pay your company offers is in line with market rates for similar roles. This delivers value to you in many ways, including lowering costs, saving valuable time and improving talent attraction and retention rates. Accurate salary benchmarking goes beyond just knowing average salaries—it includes gathering data about job responsibilities, location, industry, job levels and company size, among other factors.
A salary benchmarking tool helps automate and simplify this process, providing you with actionable insights into compensation trends. Whether you are an HR professional tasked with evaluating current compensation packages or a manager seeking to make strategic compensation decisions, using a salary benchmarking tool can help guide your decisions with confidence.
Why salary benchmarking is crucial for every role
Salary benchmarking tools are invaluable for anyone involved in employee compensation decisions. Whether you’re a recruiter trying to attract top talent, an HR professional managing employee satisfaction or a senior executive overseeing compensation strategy, having access to reliable compensation data and salary surveys can help you make informed decisions that benefit employees and the organisation overall.
These tools help ensure that compensation is fair and competitive. They also help companies maintain equity, stay within budget and attract and retain top talent. By leveraging salary benchmarking, companies can create compensation strategies that align with both business goals and industry trends—leading to a more satisfied, motivated and productive workforce.
Who leverages salary benchmarking tools?
Senior leadership and executives
At the strategic level, senior leadership and executives rely on salary benchmarking data to make high-level decisions about the organisation’s compensation strategy and structure. They use compensation packages to retain top talent, drive performance and align compensation with business goals.
Human resource (HR) Managers
HR professionals are at the heart of the compensation process, and salary benchmarking tools are essential for them to make informed decisions. By using salary survey data and benchmarking tools, HR professionals can offer competitive and fair wages aligned with industry standards that attract top talent and keep current employees satisfied.
Compensation and benefits managers
Compensation and benefits professionals focus on creating, designing and managing compensation packages that are within budget and competitive. They rely on resources like survey data and benchmarking tools to create equitable and appealing salary structures that align with the company’s financial strategy and industry trends.
Recruiters and talent acquisition
Recruiters play a crucial role in attracting the right talent, and salary benchmarking is a critical aspect of this process. They need to be aware of typical salary ranges for specific positions to ensure that the job offers they make are both competitive and attractive to candidates. By using salary surveys and benchmarking tools, recruiters can ensure they offer salaries that align with the market, making the company more appealing to prospective candidates.
Finance and payroll teams
Finance and payroll teams are responsible for ensuring that pay is accurate and in line with the company’s budget. Finance professionals rely on compensation data to forecast labour costs, set payroll budgets and ensure that compensation expenses are sustainable. Using benchmarking tools, they compare salaries against the broader market to identify any gaps and adjust as needed.
Benefits of salary benchmarking tools
Informed decisions
Make competitive and equitable compensation decisions by comparing your data against similar organisations in the market.
Fair and transparent compensation
Eliminate biases and promote fairness in pay by using reliable data to ensure all employees are compensated equitably.
Improved recruitment and retention
Attract top talent and retain your current employees by offering competitive pay packages based on market data in your specific industry.
Cost-effective HR management
Save time and resources by automating salary research and avoiding manual surveys.
Strategic compensation planning
Align your compensation adjustments, bonuses and benefits with your company’s long-term business goals.
Key features to look for in a salary benchmarking tool
There are several factors and features you should consider to ensure that your salary benchmarking tool meets your needs and supports your compensation process effectively:
1. Data security and privacy
Given the sensitive nature of employee compensation and personal data, it’s essential that any salary benchmarking tool you select complies with data protection regulations. Make sure the tool employs industry-standard encryption and data security measures to protect employee compensation data.
2. Comprehensive compensation data
The freshness, accuracy and breadth of compensation data are critical. A top-tier salary benchmarking tool should provide reliable, comprehensive compensation data from salary surveys and employee data sources. This includes data on base salary, bonuses, stock options, benefits and other compensation components. You should have access to a comprehensive database that includes the most recent information for a variety of roles, industries and geographical locations.
3. Up-to-date salary data
A good salary benchmarking tool should regularly update its data through salary surveys and employer-reported records conducted across various industries, geographies, job levels, etc. Keeping up with the latest compensation trends is crucial, as market rates can change quickly, and outdated information could lead to compensation decisions that are not aligned with current trends. Ensure that the tool you choose provides frequent updates or offers access to reliable third-party salary survey sources.
4. Customisable comparison tools
Your compensation decisions must reflect the unique needs of your business, including job roles, location and industry. A good benchmarking tool should offer flexible comparison features, allowing you to input job titles, locations, company size and other variables that influence salary ranges. Many tools also let you enter your job and compare it with a wide array of typical salary data to make sure that your offerings are competitive within your specific context.
5. User-friendly interface
The tool should be intuitive and easy to navigate. Whether you’re an HR professional or a manager, you should be able to enter, track and analyse compensation data without requiring extensive onboarding. Look for benchmarking tools with dashboards, visualisations and streamlined reporting that help HR teams and management professionals quickly grasp compensation insights.
6. Salary checker functionality
A salary checker or comparison tool is one of the most useful features of salary benchmarking software. It allows you to input specific job titles, departments or locations and get an instant salary range comparison. This functionality is helpful for understanding where your organisation stands compared to the competition and ensuring you’re offering competitive compensation packages.
7. Support for developing compensation strategies
The best salary benchmarking tools go beyond offering data—they provide insights that help HR professionals develop and refine their compensation strategies. By analysing market data, these tools can assist in crafting compensation packages that align with your company’s budget, values and overall HR strategy.
How to choose the best salary benchmarking tool
When analysing your options, review the following steps:
1. Understand your needs
Start by assessing what you need from a salary benchmarking tool. Consider the following questions:
- Do you require data on base salary, bonuses, stock options and other benefits?
- Will you need to compare compensation data across different industries, job titles and geographical locations?
Understanding these requirements will guide you in selecting a tool that meets your specific compensation needs.
2. Review your internal objectives and goals
Next, review your internal compensation objectives. Consider whether your organisation is aiming to attract top talent, retain high-performing employees or achieve pay equity across departments. Defining your compensation strategy will help you select a tool that supports your broader business goals, such as improving recruitment or streamlining compensation adjustments.
3. Evaluate your options
When evaluating salary benchmarking tools, review the following key factors:
Capabilities
The best salary benchmarking tools should provide comprehensive compensation data. Look for tools that pull data from reliable salary surveys and employee data sources. This data should cover base salary, bonuses, stock options, benefits and other key components of compensation. The tool should also support customisable comparisons based on job role, location, company size and industry, helping you create accurate salary ranges for your organisation.
Quality
Look for a benchmarking tool with a robust, up-to-date database. A high-quality tool will offer regularly updated salary data, ensuring you are working with current market trends. The tool should regularly update its salary surveys or offer access to reliable third-party salary data sources.
Security
Data security is critical when dealing with sensitive compensation data. Make sure the tool and provider adhere to industry-standard encryption and comply with data protection regulations. You will want your employee compensation data to be secure and protected from unauthorised access or security breaches.
Fit
Choose a tool that aligns with your company’s size, industry and HR objectives. Some tools are more tailored to specific sectors, regions or company sizes. Consider how well the tool fits with your organisation’s unique needs and compensation strategy.
Support
Customer support is essential when using salary benchmarking tools, especially if they offer responsive support for troubleshooting and assistance with data analysis. Access to user guides, tutorials and training resources is helpful as well.
Experience
Consider the reputation of the tool provider. Experienced vendors with a solid history in compensation data and benchmarking are more likely to deliver accurate insights and reliable functionality.
4. Choose your salary benchmarking solution
Choosing the right salary benchmarking tool is crucial for making accurate, data-driven compensation decisions that support your organisation’s overall HR strategy. Focus on key features such as comprehensive compensation data, customisable comparison tools, and integration with HR management software to ensure that you’re making informed decisions that keep your organisation competitive in the job market.
Better manage employee compensation, develop fair and competitive pay structures and contribute to the overall success of the business with the right tools. Whether you’re looking to assess salaries, compare compensation packages or fine-tune your compensation process, investing in a salary benchmarking tool will pay off in the long run by improving your compensation strategy and helping you attract and retain the best talent.
Popular salary benchmarking tools to consider
Here are a few salary benchmarking tools that HR professionals often use:
Brightmine Compensation Planning
Compensation Planning, formerly Cendex, enables HR leaders to create fair, competitive reward strategies and design them with hiring and retaining top talent in mind. Compensation Planning provides access 1.5 million UK employer-reported employee datapoints across 500 functions in 26 areas, empowering you to benchmark tailored reward packages and pay structures that will beat out the competition.
PayScale
Known for its comprehensive salary data, PayScale offers benchmarking tools, salary surveys, and a salary checker that helps HR teams make informed compensation decisions.
Croner-i
The Croner-i Salary Benchmarking Tool is a feature within the Croner-i platform that provides businesses with salary and compensation data, helping organisations compare their pay structures against industry standards.
HR-Inform
The HR-inform Salary Benchmarking Tool is a feature within the HR-inform platform that provides businesses with detailed and up-to-date salary data to help them benchmark their compensation practices against market standards across various industries, job roles, regions and sectors.
Salary.com
This platform provides rich compensation data, including salaries, benefits and bonus structures. Salary.com’s benchmarking tool also offers insights into pay trends and compensation packages across various industries.
LinkedIn Salary
LinkedIn’s benchmarking tool allows you to compare compensation data based on job title, location and industry, providing insights into average salaries and compensation packages.
Considering a salary benchmarking tool?
Get in touch with our experts today for a demo of Compensation Planning from Brightmine, formerly XpertHR, where we can show you how to access the freshest salary benchmarking data on the market with over 1.5 million UK employer-reported datapoints across more than 500 job functions.
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About the author
Madigan Naylor
Sr. Product Marketing Manager, Brightmine
Madigan Naylor is a Senior Product Marketing Manager at Brightmine, creating go-to-market strategies for product launches and releases for both compliance and compensation solutions. Madigan holds a Bachelor of Arts in English literature with a minor in French language and literature from the University of Colorado Boulder. Before joining Brightmine, Madigan worked in publishing and education tech.