The job market is more competitive than ever, so it’s important for both employers and employees to understand salary benchmarking. This process helps companies see how their pay compares to others in the industry, so they can make smarter decisions about salaries. For employees, it helps them understand what a fair salary looks like for their role and experience.

If you’re an employer, it’s key to know why salary benchmarking matters, how to do it right, and how it can benefit your company. This guide will walk you through the process and show you how it can be a game-changer for your business.

what is salary benchmarking?

Salary benchmarking means comparing your company’s salaries with what other similar companies pay for the same jobs. The goal is to make sure your pay is fair and competitive.

For job seekers, salary benchmarks help them know what kind of pay to expect based on their skills and experience. It can also guide them toward roles that match their qualifications and pay expectations.

For employers, benchmarking helps create attractive salary packages, make fair pay decisions, and keep top talent. It’s also useful for setting salary ranges and making sure pay is fair across the company.

At the end of the day, salary benchmarking helps both sides. Candidates know what’s fair, and companies know their limits when offering salaries.

why is salary benchmarking important?

Salary benchmarking matters because it benefits everyone. Here’s how:

• Attracts top talent:

  Offering competitive pay shows that your company understands market standards. This makes you more appealing to skilled job seekers.

• Keeps employees longer:

  People who feel they’re paid fairly are more likely to stay. If another company offers the same salary, they’ll have less reason to leave.

• Promotes fairness:

  Benchmarking helps make sure all employees are paid fairly for their work. It also supports legal pay equity and fairness across the team.

• Boosts employee engagement:

  Fair pay makes employees feel valued. That leads to better morale, motivation, and performance.

• Supports smart decisions:

  Benchmarking gives you the data you need to adjust salaries as the company grows and as market conditions change.

When companies take salary benchmarking seriously, it benefits everyone. Employers build stronger teams, and employees feel secure knowing their pay is fair.

how to do salary benchmarking: a step-by-step guide

Salary benchmarking means collecting and analyzing pay data to make sure your salaries are competitive. Since markets and business needs change, many companies update their benchmarking process once a year to stay current.

Here’s a clear, step-by-step guide to help you start:

• Set Clear Goals

First, decide why you’re doing salary benchmarking. Is it to attract better candidates, improve pay fairness, or adjust salary ranges? Then, choose which roles to benchmark—usually it’s best to start with key or core positions.

• Gather Salary Data

Use trusted sources like salary surveys, industry reports, or compensation databases. You can also look at websites where employees share salary information. Next, collect your own company’s current salary data so you can compare.

• Choose the Right Benchmarks

Make sure you’re comparing jobs that are similar in size, responsibility, and location. A role in a large city will likely pay more than the same role in a rural area, due to cost of living differences.

• Analyze the Data

Compare your company’s pay with the market averages. Look at more than just base salary—consider benefits, bonuses, and work-life balance too. But keep in mind: perks can’t fully make up for big pay gaps.

• Make and Apply Adjustments

Use your findings to set fair and competitive salary ranges. If you make changes, explain them to your employees so they understand why. Also, update job descriptions and train your HR team to use the new data when hiring and onboarding.

• Review and Update Regularly

Check your benchmarks each year—or more often if your industry changes quickly. This keeps your salaries in line with the market and shows employees that you’re keeping up with inflation and company growth.

While the first round of benchmarking can be time-consuming, future updates will be easier once you’ve built a solid foundation.

key elements of salary benchmarking

Successful salary benchmarking depends on a few important factors. Industry, location, job responsibilities, education, and specialized skills all play a role in setting fair and competitive pay.

• Job Title and Responsibilities

Match roles based on what people actually do—not just the job title. Titles can vary widely between companies, so always compare detailed job descriptions to get the most accurate match.

• Industry and Sector

Salaries vary between industries. Tech companies, for example, may offer higher pay than non-profits for similar roles. To benchmark accurately, use data from your specific industry to avoid over- or under-estimating pay.

• Location

Where a job is located matters. Pay should reflect the cost of living in that area. For instance, someone living in Seattle will likely need a higher salary than someone in rural Nebraska. Your pay ranges should match the location where most of your employees live and work.

• Experience and Education

Take into account years of experience, education level, and relevant work history. For example, someone with 10 years in a similar role will expect more than someone fresh out of school.

• Special Skills and Certifications

Specialized skills or rare certifications can greatly affect salary. If you're hiring for a hard-to-find skill that’s critical to your business, you may need to pay more to attract and keep the right person. Your benchmarking should reflect the demand and rarity of these talents.

When you focus on the right factors, salary benchmarking becomes much easier and more effective. Keep in mind: the rarer the skill, the higher the benchmark may need to be.

confidently set salary benchmarks

Salary benchmarking is key to building fair and competitive pay structures. With the right approach, you can make smart decisions about salary ranges, attract great talent, and ensure fairness across your organization.

The good news? You don’t have to do it alone.

With access to real-time market data across industries and roles, Meet Minds helps you build competitive, fair compensation bands based on current benchmarks—not guesswork. Whether you're hiring for a new role or adjusting existing pay structures, you’ll have the insights you need to stay aligned with the market.

And with meet minds’ Compendation § Benefits Benchmark study, you can easily compare salary ranges, job levels, benefits, and more.

Let meet minds power your compensation strategy with confidence.