By Alexander Daniels, Offshore Recruitment
With hybrid-working now the norm, we’re increasingly seeing wider conversations around the modern workplace and how employee empathy, flexibility and pay transparency is shaping office culture.
At the same time, pay transparency legislation is coming to the forefront in 2026 and it’s becoming increasingly vital that employers set informed and accurate direct salaries. Effective salary benchmarking will become an incredibly valuable tool, especially for larger businesses that want to integrate and streamline their operations.
By properly integrating salary benchmarking, these businesses will not only be able to identify where the market is today but also where it’s going. By identifying trends, they’ll be able to establish more effective pay structures and build out an efficient salary strategy.
With this in mind, we’re exploring what salary benchmarking is, the benefits of salary benchmarking and how you can conduct proper salary benchmarking in an effective way.
First, what is salary benchmarking?
Salary benchmarking is a process businesses can use to determine how much they’re paying individuals in the company, how much they should be paying based on the local market and what their financials may look like if they were to restructure their team.
Businesses can do salary benchmarking by evaluating the average salary of a specific role in the industry, compare this with competitors in the market and then use this to create a ‘salary benchmark’.
The information that comes out of a salary benchmark can be used in several different ways but is primarily used to inform internal policy going forward. This is particularly true in hiring, where an employer may use the data to compare their own compensation package against competitors and then make adjustments based on the role they’re hiring for.
If a business is looking to restructure or going through a merger, salary benchmarking is an efficient way of evaluating titles, company size and average salaries, which in turn informs potential promotions, employee engagement opportunities or redundancies.
How can a business do salary benchmarking?
If a business is looking to utilise salary benchmarking going forward, the best option is generally leveraging several different tools and data sources, combining to create an aggregate.
This not only ensures a complete picture of the market but delivers a wider bank of data focused around accuracy, which is key for laying a successful foundation.
A great place to start is on job boards or popular job sites. Identify the various roles you’re benchmarking for and get an idea of what other companies are offering across different locations. Provided you remember that salaries might change based on experience, the size of the company and location, this offers some rough figures you can bring together.
Once you have this foundation in place, it’s time to start getting more granular. Consider researching more specialist roles, their responsibilities, requirements and the more advanced benefits they provide.
At this point, working with a trusted third-party can be incredibly useful.
Here at Alexander Daniels, for example, we’re able to support benchmarks across a range of industries and companies, leveraging our wealth of experience around the topic to deliver key data.
We understand how the market works because we operate in it every day. Research tools, such as the AD Offshore Salary Guide, can help you build a deeper understanding of both the market today and in the future.
Now that you have all of the data you require, you can start implementing this into your internal structure, especially when you’re recruiting for new roles. Build out your salary ranges based on this information and remember to consider the additional benefits that you might need to introduce.
It might sound obvious but it’s a challenge many people face. You need to use the data in the correct way and ensure all of this hard work hasn’t been for nothing.
What are the benefits of salary benchmarking?
Salary benchmarking is able to deliver a wide variety of benefits including:
Improve your recruitment
If you want to find quality talent, you need to offer quality compensation. In a crowded market, you want to lead the way and salary benchmarking is a much easier way of achieving this.
By properly utilising salary benchmarking, you can ensure you’re presenting exciting roles to the industry, which in turn means you’ll be speaking to highly-skilled, ambitious professionals ready to help you meet your objectives.
The existing market is still candidate-led, meaning potential hires will typically have plenty of opportunities available during one job search. With less ‘active candidates’ in the mix, effective hiring becomes more about employee empathy and what you’re able to offer, rather than a numbers game of screening CVs.
Luckily, having accurate salary benchmarking data means you can build out the frame of a desirable, employee-led workplace.
Retain existing talent
While salary benchmarking is usually utilised as part of a recruitment effort, it’s equally as useful when you’re looking to retain talent.
Expansion is one of the most difficult aspects of running a business and can often result in employee turnover, which in turn brings with it financial challenges and lower morale.
It’s the catch every business owner faces. You need staff to expand but every time you hire, you run the risk of a ‘bad hire’, which can directly cost you thousands of pounds with no end result.
This is why employee retention is often more valuable, even if it does require more work. If you have quality staff already in place, it’s usually better to introduce better benefit packages, opportunities for upskilling and build out a more rewarding culture.
Finally, if you’ve got your salary benchmarking right, you’ll be less likely to lose talent to competitors and maintain a consistent, efficient operation on a daily basis.
Widen your competitor research
Information is power and you can never have too much, whether it’s information around the local market or what your competitors are up to.
Competitor research is difficult but salary benchmarking is a great way of getting insights into other business methods without paying through the nose.
If you’re able to get a decent idea around what competitors are paying their staff, you’re in a much better place to set up as a market leader whilst overhauling your compensation strategy based on reliable data sources.
At the end of the day, recruitment is all about culture fit and compensation. Can you offer a better experience than your competitors? If the answer is yes, you’ll find the entire process of building a business much easier.
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