If compensation is key, how do you unlock insights into market rates?

The salary for a specific position within a country depends mostly on these four factors:

• Sector
• Hierarchical level
• Job requirements
• Performance

A salary survey is normally published by sector and position. The salary figures show the midpoint and average salary of employees within a given job or across the entire organization.

Another key figure is the salary range, i.e., the range of salaries offered for a particular job across different organization sizes. Besides these figures, information about additional reward elements such as short and long-term incentives as well as distribution of the different salary components can be shown.

By comparing the salaries of employees in a particular position within an organization with salaries for similar roles in other organizations or industries, important information can be gathered about the companies’ salaries. This analysis can help organizations to determine whether their salaries are competitive in the marketplace and whether they are likely to attract and retain top talent.

The comparative analysis of salaries involves:

• Identifying benchmark positions within the organization
• Determining the salaries for those positions

Next, the organization can compare its salary ranges to those of other organizations or industries, looking for similarities and differences. For example, they might compare the median or average salaries for a particular role to see their position compared to competitors. They may also consider factors such as location, industry, company size and other benefits and perks offered to employees.

If the organization finds that its salaries are significantly lower than those of competitors, it may need to adjust its salary ranges to remain competitive. This could involve increasing salaries for certain roles or adjusting the overall salary structure to better align with market rates.

Equipped with more knowledge about salaries in general and about the company’s position compared to the market, it is of great value to further investigate individual employees’ salaries. A line-by-line comparison – involving detailed comparison of two or more employees – reveals more about the internal distribution. The aim is to identify differences and similarities between employees. This approach is commonly used to gain precise information about the employees within an organization.

Another helpful possibility is to compare internal salary distribution with salaries of external job positions with similar characteristics. The first step in this process is to build clusters of companies from the same region of a similar size. This allows an analysis of your workforce’s salaries with similar workforces’ salaries from other organizations.