What is a Benchmark Job?
A benchmark job has a set of tasks constant from one organization to the next and for which data is accessible in credible and reliable compensation surveys.
To categorize a benchmark job, data from relevant wage surveys are collated to estimate the median compensation rate for the position. The position is then "slotted" into a salary grade with a grade midpoint closest to the survey median wage.
How companies benchmark roles
Human resources specialists are often in charge of investigating and administering the benchmarking. To determine which positions will be benchmarked and what pay, criteria and duties will be included in a role inside a company. The first step is to do research.
Surveys can be performed in a variety of ways. Managers and other staff in certain firms are asked to complete worksheets to determine the work qualities and aptitudes required to fulfil specific job duties. Aside from surveys, research is carried out to assess labour trends and data relevant to a given position. To complete the data collection, a study of pay for similar occupations, both within a geographic area and throughout the industry, is done.
When should you benchmark?
Benchmarking is a helpful method for confirming that your company's salaries are competitive in the market. Each year, your firm should benchmark a fourth to a third of its workforce population. Regular upgrading guarantees your wage structure remains competitive in the market.
The following are some instances of benchmarking scenarios.
Reorganization: When a company or a specific line of business reorganizes, the area of responsibility for a position may change, roles may merge, and new jobs may be created. This is a perfect point to go through benchmarks because the change may have rendered earlier benchmarks outdated.
Hiring issues: As company demands evolve, specific roles gain market relevance. If salary falls out of line with competition because benchmarks are not kept up to date, or if market data for hot occupations is unavailable or old, a position may remain vacant for a lengthy time. Understanding the role's requirements and ensuring that the appropriate benchmarks are applied will assure management that their remuneration plans are market competitive.
New role formation: Situations happen when a new role must be created in all businesses. In these circumstances, your organization's compensation staff should benchmark your survey sources for that specific function to ensure that pay is competitive.
A shift in compensation strategy: If your company is making fundamental changes to its pay practices, such as a wage structure or an incentive scheme, it is critical to understand what the market is doing for specific roles or positions. For example, understanding how to benchmark your commercial lending group might give more information about setting new compensation structures.