This approach to benchmarking compensation at your workplace can work across business and sectors, industry domains. If undertaken well, and with reasonable thought and effort the benchmark percentiles would be a good guide related to the identified jobs, industry and target companies. They can help in deciding or recommending your teams increments.
The approach assumes that you have access to the job portal’s database. Start-ups, and small business who don’t have a budget for a full scale compensation survey can try the approach for benchmarking compensation and establishing their pay-grades, pay decisions. Established companies can also benefit from the approach, and can undertake a quick exercise any time they want to check the markets. This may not be relevant for senior management positions, condsidering that the sample size that you may obtain from job portals would be very limited.
Benchmarking compensation for your business:
- Identify target companies, and job roles within your business for which you want the benchmarks. Undertake a search of similar job applicant profiles (as your benchmark jobs), to ascertain equivalence of job roles across the target companies. For ex. Your Sr. Developer is equal to their Team Lead etc. Equivalence can be estimated based on review of roles & responsibilities as captured in the persons resume and the salary level for the concerned.
- Download list of job applicant profile with salary data for identified companies: Once you get an idea of job/designation equivalences for the positions you want to benchmark, download list of job seekers from the identified companies for concerned positions / job levels. Your sample size for downloads can be based on the extent of diversity you want in the data. A bigger sample size is always good. But these days, the job portals don’t allow big downloads.
- Try to get recently updated data., and clean up the data: Ensure that the data is downloaded preferably for those job applicants, who have updated their profiles recently (3-6 months). Add this in your search criteria. In absence of the same you can go for old data – but then you may want to add discretionary 10-15 % extra over the averages. Also, clean up the dump – remove data pieces with incomplete information.
- Play around with data – to identify averages, percentiles across experience, job role, qualification. Validate by cross checking with resumes to understand job components in case of extreme variances. Remove those that appear to be outliers. Either the data is wrongly entered by the concerned or may not be relevant for you.
- You should have the first cut of salary benchmarks for identified job roles ready by now.
- Cross validate. Check with your hiring team to validate the benchmarks based on their understanding of the market from the interviews, and conversation with job applicants etc. Speak to friends , ex colleagues in other companies, competition to get their inputs. Check some recent job postings on portals, linkedin, etc., to generate alternative data points for cross validation.
- Finalise the benchmarks, rationalise here and there if needed. And you have a ready data set for use with your business.
- Implementation: Check out your businesses financials, and how much money can be leveraged for annual increments etc. Now, based on your purse strings decide on the compensation levels for the identified jobs, opportunity for increments, percentage for increases etc.
Praveen is the Founder & Principal Consultant of KHEdge, a boutique HR & Business Process Advisory firm. Over last 15 years he has advised & worked with promoters, founders, business leaders, HR leaders in areas of - Business Strategy, HR Strategy, Organisation Design etc.