Remuneration benchmarking in Australia

One of the most common questions asked during a job interview is, "What is your expected salary?". Many people wonder how to work out their desired salary. Salary benchmarking is a helpful tool for identifying and comparing fluctuating salaries across different roles. To remain competitive and attract top talent, it’s integral for businesses to be aware of remuneration benchmarking in Australia.

What is remuneration benchmarking?

Remuneration refers to the compensation given to an individual for their work, services, or contributions, typically in the form of money, benefits, or other incentives. It encompasses not only the monetary aspects of a job, such as salary and wages, but also non-monetary benefits, like health insurance, retirement plans, and paid time off.

Remuneration benchmarking is a helpful process that allows organisations to compare market data of the salaries of specific roles against those of similar positions in the same industry.

Having a benchmark allows employers and employees to accurately gauge the average salary for a role they are hiring or applying for.

Benefits of remuneration benchmarking

A salary benchmarking tool is helpful in many regards. It not only provides valuable information but allows employers to make informed decisions.

The benefits of salary benchmarks include:

Benchmarking against competitors within the same industry: Benchmarking reveals what other companies or organisations might offer for the same role you are hiring for. A salary guide will identify the average salary for a role within an industry, allowing you to offer something similar or higher. Offering a salary below industry expectations may deter potential candidates or incite current employees to seek a job elsewhere.
Comparison with different industry sectors: A benchmarking tool allows you to see what the salary expectations are within your own industry and provides insight into other industry sectors.
Compliance with legal requirements: All employers should pay within an agreeable salary range. Paying significantly below the industry benchmark or legal standards would not be beneficial. If you pay below the minimum legal standards, compliance repercussions might occur.
Impartial and accurate data: Access to salary data allows you to refer to unbiased information. Having reliable information will enable businesses to make more informed and effective decisions.
Promote fairness and transparency: A salary guide allows people to be paid fairly and in accordance with industry standards. Having a benchmark makes the hiring process easier by allowing both employers and employees to be upfront regarding salary expectations.
Increasing staff retention: People want to be paid competitively and often decline a job offer or look for another job if a salary offer is too low. It is integral to have market insights into what competitors are paying to offer an attractive salary.
Market positioning: Companies known for competitive compensation are more likely to increase their brand awareness and overall market positioning. Potential employees have access to a variety of review sites that showcase a company's salary or reviews from former employees. A reputation for paying well can attract top talent and enhance the overall image of your business.

Challenges with remuneration benchmarking

Remuneration benchmarking is helpful and reliable overall, but it has some challenges. For example, obtaining real-time and accurate data can prove challenging. The market changes frequently, and relevant information for one year might differ from the next. The nature of the change in market conditions means that remuneration standards can shift regularly, consequently requiring constant monitoring.

There are limitations to the information salary surveys can provide, and it is up to businesses to keep them informed of the changes in salary benchmarking. It can also be costly to adjust current remuneration packages to meet industry benchmarks, and companies should weigh their financial capabilities before doing so.

Remuneration benchmarking processes

Remuneration benchmarking requires robust methodologies to compile accurate salary surveys, such as:

Collecting data: The most integral step in remuneration benchmarking is gathering data. Entities can collect data from government publications or other industry reports. Most surveys will gather data regarding average salaries, hiring trends, and industry benchmarks.
Job matching: Job matching is the task of matching similar jobs with each other to compare the right roles. Jobs must be grouped in accordance with their similarities in a job description, required skills, and levels of experience. Accurate job matching is also essential for people to conduct a reliable job search.
Interpreting and implementing the data: The data collected regarding salary ranges and other market trends helps compile informative guides or benchmarks. Most guides list the average salaries for a specific job title and the relevant compensation packages.

How to use salary benchmarking

Here are some best practices you can incorporate as a business regarding remuneration benchmarking:

Conduct regular reviews: Salary surveys change from year to year. As the market changes, so does the data regarding industry benchmarks for salaries. Conduct consistent reviews to stay up to date with market trends. Knowing the current salary trends is integral for hiring processes, as many potential candidates will decide on a job based on a competitive salary.
Engage in transparent communication: Have open conversations with candidates or existing staff regarding salary expectations. Candid discussions will also reduce the possibility of employees looking for another job because they aren't content with their salary.