Author: Louise Haines, Managing Director at Henley Reward Consulting
As we move into 2022, organisations are facing mounting skills shortages, particularly in certain sectors, with increased risks and concerns around retention as companies compete for talent. The pandemic has added to this pressure by accelerating a shift in candidate priorities, as well as many employees evaluating their current company’s actions and treatment of personnel during the last two years.
This movement is resulting in a candidate led market with significant salary growth across many areas. Given the cost implications for employers there is a significant need to take a step back and re-evaluate working practices, pay policies, recruitment strategies and employee engagement.
Easier said then done I hear you say. How do organisations track pay and reward mechanisms when it is changing at such pace? A recent survey of HR and Reward specialists by Henley Reward Consulting found that the majority of organisations at 48% gained their pay data through paid access to generic salary surveys. These are typically annual surveys so potentially the data here could be 11-12 months out of date already. A smaller percentage at 31% commissioned more tailored and rigorous benchmarking studies and 15% of the sample were reliant on publicly available data to obtain external market pay data, managing their processes inhouse.
Although organisations are assessing their pay against the market, there is a level of inconsistency on the quality of the data that enables companies to make informed decisions confidently around their pay and reward strategies. A follow up survey by Henley Reward Consulting found that 38% of HR & Reward Specialists were happy in the majority of cases with their benchmarking outcomes. In contrast the same amount at 38% felt they were not getting the quality of information required from their data, whilst 24% of the sample stated that the condition of their benchmarking data was mixed half of the time.
Benchmarking is not an exact science and there are significant nuances to each and every role and structure within an organisation. So, what can help to make a more accurate evaluation?
As one Head of Reward stated, a more accurate benchmark starts with a robust job evaluation process, or indeed a robust organisational structure and meaningful job and/or person specifications that incorporate the relevant skills and accountabilities to enable an appropriate read across to the responsibility levels in any survey.
“Consistency” in the data was another key attribute noted by a Global Reward Director, as well as the quality of the data being gathered. Having a robust sample from the most appropriate peers and comparators relevant to your organisation and sector will mean that you can have more confidence in the information to enable more accurate decision making. An indication of company size and location is also helpful, though the latter may become less relevant as remote working becomes more the norm.
One other aspect that I think supports a quality driven process is by having the context to what the numbers are saying so that you can truly understand the definition of the “median” or other quartile outcomes in contrast to your structure. A HR lead stated that “where we start to trust the data is when there is more content / narrative around the roles being benchmarked”.
A key aspect to improving the data quality is to take a look at the options around salary benchmarking. There are so many variants and service offerings that it is important to have a sense of what each can provide to help meet your needs. In addition, having a range of tools to assess the market is also important. Being able to feed in data from your talent acquisition teams and your recruitment processes will all help to provide that broader context, in addition to any insights gained from your networks and professional associations.
Note: Henley Reward Consulting is a specialist provider of research led remuneration benchmarking, reward insights and D&I evaluations for Executive and organisational wide functions, to support the development of robust people strategies. We understand the importance of real time data and how data can support an organisation through its journey. For more information please visit: Henley Reward Consulting