By Alexander Daniels, Offshore Recruitment
It should come as no surprise that the modern workplace is still employee-led.
As hybrid-working becomes more commonplace, it’s become a catalyst for further conversations around empathy, flexibility and pay transparency, which is effectively moulding modern office culture.
Employers are now, more than ever, being encouraged to adopt employee-first policies and deliver fair compensation, diverse benefit packages and additional bonuses to ensure they’re competitive in the market.
Despite these changes, salary remains the number one priority for the majority of workers. If the money is too low, employees simply won’t join.
This is where employers can utilise salary benchmarking, a concept specifically designed to identify actionable data around compensation and company structure. Businesses can utilise salary benchmarking to identify market trends, establish pay structures and build out a compensation strategy.
Below we look at what salary benchmarking is, the benefits of salary benchmarking, how you can conduct salary benchmarking and how to go about the process.
First, what is salary benchmarking?
Salary benchmarking is fundamentally a way for employers to determine how much a role is worth, how much they’re paying specific people in a role and how much money they might need if they were to restructure their team.
It’s done by evaluating the salary package of a specific role or field in the industry, comparing this data with competitors in the market and then using this to create a ‘salary benchmark’.
While information gathered during the benchmarking process is able to be used in several different ways, it’s typically utilised for informing internal company policies. Employers generally use the data to compare their offering against competitors and then make adjustments based on the findings. This ensures they’re able to attract talent whilst also retaining the existing talent within the business.
At the same time, salary benchmarking can be a great tool for supporting recruitment efforts or navigating company restructures. Some businesses use benchmarking to set salary ranges for new roles, especially if they’re creating or expanding a team that is entirely new to the organisation. Here, benchmarking can remove any of the guesswork and create an efficient recruitment pipeline.
If a company is looking to restructure or going through a large merger or acquisition, salary benchmarking helps evaluate job titles, company size and average salaries, which in turn highlights potential opportunities for promotion, employee engagement or redundancies.
How can a business do salary benchmarking?
So, we know that salary benchmarking is useful but how do we actually go about doing it?
Usually, the best option is an approach that leverages multiple channels, data sources and tools. This ensures you’re building a complete, effective picture of the landscape and a bank of data that you know is accurate. Accuracy is key here; if you’re restructuring teams based on bad data, you’re setting yourself up to fail.
The first thing you might do is run searches on a job board or popular jobs site. Run through the roles you need information around and what other companies are offering. The main thing to consider here is that location, experience and the company itself may affect the salaries on offer, but it’s still good to have rough figures in place.
Once you have a basic framework in place, it’s time to start looking further afield. Consider looking at more specialist roles, what they require and the advanced benefits packages they receive. Understanding and filtering this information helps you flesh out the framework.
If you’re unsure how to do this, you may want to consider working alongside a third-party that is able to help with the process.
Here at Alexander Daniels, for example, we’re able to support salary benchmarks of all shapes and sizes, utilising our wealth of experience around the topic and knowledge of the local market to deliver key data. Our time in the market means we have a good idea of how the market has shifted, what roles are worth today and how that might change going forward.
You can find all of this experience and information in our annual salary guide, which has over 30 salary surveys across the finance and accountancy field. Download the 2026 Salary Guide
Now you have all of the data you need in place, it’s time to use these when building out your company policies. When you start recruiting for roles, look at the figures laid out in the salary benchmark and set salary ranges based on the data. Make sure to implement any additional benefits that are expected with the role and market this when you’re recruiting.
It might sound obvious but many people fall into the trap. You need to use the data you find during the process and make sure all of the hard work doesn’t fall by the wayside.
What are the benefits of salary benchmarking?
If the main benefit of salary benchmarking is informing company policy, there are several other benefits it’s able to provide:
Improve the results of your recruitment
The easiest way to find quality talent for your business is by offering a competitive compensation package and standing out from the crowd. In a more crowded market, you want to be the market leader and salary benchmarking is the way to achieve this when it comes to establishing pay packages.
If you’re able to provide exciting roles backed up by knowledge of market rates, location and salary trends, you’ll quickly find yourself speaking to experienced and highly-skilled professionals who can take your business to the next level.
It’s important to remember that the market is still largely led by candidates, many of whom will have multiple options available to them. As the pool of ‘active’ candidates shrinks, recruitment becomes an exercise in employee empathy, rather than simply screening as many CVs as possible.
Fortunately, salary benchmarking is a huge tool in your arsenal and can help you create the framework for a desirable, employee-led workplace, which in turn can help you drive long-term success.
Retain star talent
Just as salary benchmarking can help you find new talent, it can also help you retain the existing talent you have in the building.
Many new businesses struggle when they start to expand and employee turnover can quickly become an issue. While it’s critical that businesses look to grow wherever possible, having a ‘revolving door’ of employees in the business can lower overall morale within a team and make things much worse.
With this approach you’ll also find yourself constantly hiring, which significantly increases the chance that you experience a ‘bad hire’, a problem that can directly cost your business thousands of pounds for little-to-no return.
It’s much easier in both senses to focus instead on employee retention. Hire quality from the start and nurture that talent, whether it’s through benefit packages, upskilling or a rewarding culture.
Effective salary benchmarking leads to competitive pay, which makes it harder for competitors to poach staff and ensures a consistent, efficient operation from day-to-day. It’s important to remember that while employee benefits, flexibility and empathy are all part of the wider conversation, salary remains one of the main reasons people leave a role.
Widen your competitor research
You can never have too much information, whether that’s information around your local market or your competitors, how they’re operating and what they’re offering.
Finding ways to research your competitors can be extremely difficult but salary benchmarking is a great way of doing so while also helping you improve your own operations.
If you can get a rough idea about how much your competitors are offering their staff, you’re in a much better place to position yourself as a market leader whilst also overhauling your salaries and benefits 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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