5 Best Salary Benchmarking Tools for Competitive Pay Analysis
As the job market continues to evolve, the cost of living, salaries, and benefits are all rising globally. This quick evolution presents a difficult challenge for hiring managers and HR reps who want to keep up with their local market and what competitors offer new employees. That’s where salary compensation benchmarking tools can help.
SEE: New employee checklist and default access policy (TechRepublic Premium)
By providing up-to-date data on salary averages for different industries and even specific positions, compensation benchmarking tools can help HR teams compare their salary offers to the market rate to ensure they offer competitive wages. In this guide, learn about some of the best compensation benchmarking tools available today and how they can help your recruitment and hiring efforts.
Best compensation benchmarking tools: Comparison table
A key part of finding the right candidate for any role is offering an attractive salary that works for both the company and the candidate. The best compensation benchmarking tools can help you and your candidates agree on salary expectations.
SEE: Find high-paying cybersecurity and IT support jobs in these U.S. cities
These tools provide data on salaries in your area, considering factors such as experience, cost of living, and benefits. You can then adjust the salaries you offer according to your own needs and business goals.
With that knowledge in mind, here are some of the best compensation benchmarking tools:
Indeed: Best for up-to-date salary insights
Indeed is an online job search engine that allows job seekers to search for jobs posted by employers, create résumés, and apply for jobs. It also provides employers with a platform to post job openings and manage recruitment.
In addition, Indeed provides a compensation benchmarking tool that allows employers to view detailed salary insights for informed compensation decisions. With Indeed Salary, employers can compare salaries for specific job roles, locations, and company sizes to see how their compensation stacks up to the competition.
The tool allows employers to see how their compensation compares to industry averages and national and local salary trends. Job seekers can use it to understand what salary they can expect in a certain market or job type.
Key features
- Salary estimates: Indeed estimates the average salary for a job title in a given location.
- Salary comparison metrics: This tool allows users to compare salaries for different locations, job titles, and industries.
- Multi-source data: It includes salary data from multiple sources, including job postings and surveys.
- Advice for job seekers: Indeed offers users salary ranges and salary negotiation advice.
- Salary calculator: Indeed includes a salary calculator to help users estimate their market value and negotiate salary offers.
- Company profiles: Indeed creates company profiles with information on job openings, ratings, and reviews from current and past employees.
Pros and cons
| Pros | Cons |
|---|---|
| Mobile app available for on-the-go access. | No information provided on potential bonuses. |
| Detailed salary comparisons between different roles in the same industry. | Data filters can be improved. |
| Updated regularly with new data and job market trends. | |
| Free to use. |
Pricing
The compensation benchmarking tool is free to use and provides a detailed look at salary data for job seekers and employers.
Payscale: Best for enterprise HR teams
Payscale is an AI-powered compensation tool that helps employers and job seekers make informed decisions about salaries. It offers access to salary data on millions of job titles across hundreds of industries, including U.S. and international markets. It also analyzes job titles, pay trends, and salary data for specific locations.
With its reports, employers can compare their pay structure to industry averages and adjust as needed. Job seekers can use the data to inform their salary negotiations and compare potential salaries for different job titles. Payscale also includes salary surveys, cost-of-living calculators, job descriptions, and employer-specific salary data.
Key features
- Salary information: Payscale provides salary information to help employees make informed decisions about their careers and compensation. This includes average wages, salary ranges, and salary trends.
- Job search tools: Payscale allows users to search for jobs by salary, location, and industry.
- Career resources: Payscale offers career resources to help users make informed decisions about their career paths. This includes resources for job seekers, career changers, and employers.
- Cost of living calculator: Payscale’s cost of living calculator allows users to compare the cost of living in different cities.
- Negotiation tips: Payscale provides negotiation tips to help employees maximize their salary.
Pros and cons
| Pros | Cons |
|---|---|
| Compensation scenario builder. | Steep learning curve. |
| Custom user profiles based on current job role. | |
| Comprehensive database of reported data from over 65 million employees. |
Pricing
- Price a Job tool, salary reports, and other tools for individuals: Free
- Full version for employers (including PayFactors, MarketPay, and Pay Equity Solutions): Quote available on request
Bureau of Labor Statistics (BLS): Best for national trends
The Bureau of Labor Statistics (BLS) is a government agency within the U.S. Department of Labor. It collects, analyzes, and disseminates labor-related statistical data to the public.
The BLS manages data on various topics, including employment trends, wages and benefits, inflation, productivity, and workplace safety. It produces reports on special topics such as occupational injuries, job openings and separations, and labor force participation.
Key features
- Access to comprehensive labor market data: The BLS provides access to the latest labor market data from the U.S. Department of Labor, including employment and unemployment statistics, occupational outlook data, and labor force projections.
- Interactive data visualizations: The BLS provides easy-to-use visualizations, allowing users to explore and compare data quickly.
- Jobs and wages database: The BLS provides access to a comprehensive database of job titles and corresponding wages, enabling users to compare wages across occupations and industries quickly.
- Industry-specific data: The BLS provides industry-specific data, allowing users to compare wages within a specific industry easily.
Pros and cons
| Pros | Cons |
|---|---|
| Robust data filters. | Interface could be modernized. |
| Downloadable reports. | Steep learning curve. |
| Comprehensive database. |
Pricing
This tool is free to use with no limits.
SalaryExpert: Best for cost-of-living data
SalaryExpert is a salary and compensation data platform that provides salary reports, cost-of-living comparisons, and salary survey data. It provides a comprehensive resource for employers and job seekers to compare salaries and plan their career paths.
The tool offers users salary analysis tools, industry trends, and job market insights. SalaryExpert allows users to access salary data for various jobs and locations and compare salaries among different industries and regions.
Key features
- User-defined regions: Use user-defined regions to get average pay rates for different locations.
- Detailed labor cost information: SalaryExpert covers the cost of labor and cost of living differentials, minimum wage, and FLSA alerts.
- Import/export: Import job data and export customized salary reports.
- Extensive databases: It offers compensation databases with over 11,000 job titles, 1,100 industries, and 8,500 locations.
Pros and cons
| Pros | Cons |
|---|---|
| Gathers data from three sources. | Cost of living data for cities outside the U.S. is limited. |
| Conducts advanced analytics. | |
| Provides data for executive pay. |
Pricing
This is a quote-based tool. Potential buyers should contact the provider for a custom price.
What are compensation benchmarking tools?
Compensation benchmarking tools are software applications that enable employers to compare their compensation practices with those of other organizations in their industry or geographic area. Combined with HR analytics software, benchmarking tools can be used to identify areas of opportunity and to develop a comprehensive, data-driven compensation strategy.
SEE: What does ‘data-driven’ really mean? (TechRepublic)
Salary benchmarking tools provide a comprehensive view of the market, allowing employers to assess their competitiveness and decide how best to attract and retain top talent. They typically include salary and bonus information, benefits packages, pay structures, job descriptions, and other factors. These tools can be used to identify compensation trends, assess the current market, and develop strategies to remain competitive.
What factors are considered in salary benchmarking?
- Job role and responsibilities: Salaries should be compared among positions that demand similar skills and experience.
- Industry: Salaries can vary significantly by industry, even in equivalent roles.
- Location: Cost of living and regional market conditions influence salary differences.
- Company size: Larger companies offer higher salaries and more benefits.
- Market demand and supply: High-demand roles with small talent pools typically offer higher pay.
- Economy: Inflation, employment rates, and other economic metrics can impact salaries.
- Benefits: Total compensation includes bonuses, stock options, health insurance, and more.
- Company performance: The company’s financial health will affect the salaries it can offer.
Benefits of using compensation benchmarking tools
Optimized talent acquisition
Compensation benchmarking tools can provide data to help organizations identify areas where they need to invest more to attract top talent. This data can inform decisions about how to structure compensation packages to recruit quality employees.
Improved employee retention
Compensation benchmarking tools can be used to develop competitive pay practices, ensuring an organization’s salaries remain competitive and attractive to current and potential employees. Organizations can develop competitive salaries and benefits structures by utilizing compensation benchmarking tools to retain their top talent.
Increased employee satisfaction
Employees are more likely to feel satisfied and motivated when they believe they receive competitive wages and benefits. Compensation benchmarking tools can be used to identify and correct any pay disparities. They also offer a level of salary transparency that a growing segment of employees and job seekers want to see from employers.
Better pay transparency
These tools enable organizations to create and maintain transparent and equitable compensation structures by providing a clear view of the external market for each job. This can reduce pay inequities and ensure employees are compensated fairly. Further, pay transparency often builds trust between employees and management, improving overall morale and productivity.
More equitable compensation structures
Compensation benchmarking tools can identify and address any pay disparities within an organization, helping to ensure all employees are fairly compensated regardless of gender, race, or other protected characteristics.
Compliance with government regulations
Compensation benchmarking tools can help organizations confirm their pay practices comply with applicable government regulations. This can help employers avoid costly penalties or fines that might be imposed for non-compliance.
Using compensation benchmarking in a competitive market
Job market, role requirements, and job seeker expectations continue evolving, particularly in fast-moving B2B and B2C technology industries. If your HR team is having trouble keeping up with all of these changes, compensation benchmarking tools can supplement their work with your industry’s most recent data on salaries. Knowing the average salary for a given role can help you adjust your offer to remain competitive.
How often should salary benchmarking be done?
It is customary to perform a performance review with employees at least once a year; a salary review is often part of it. However, benchmarking more frequently is beneficial in a turbulent economy and can help companies stay competitive when attracting and retaining talent.
Not all roles need benchmarking regularly, but if a role has high employee turnover or is difficult to fill, it may be worth revisiting the salary. Exit interviews and candidate feedback can help identify if the salary is a barrier. Ensure the data used is up-to-date, legitimate, covers different skillsets and experience levels, and that it aligns with the business.
Read next: The best applicant tracking systems (TechRepublic)
Source link
/cdn.vox-cdn.com/uploads/chorus_asset/file/23951355/STK043_VRG_Illo_N_Barclay_1_Meta.jpg)