Market salaries are the going rates the employment market is willing to offer for particular roles. These figures are often calculated by comparing similar positions in the same sector and region. You can utilize salary benchmarking to understand compensation levels across all organizational roles.
Use market salary data to assess pay competitiveness and compare that with internal salaries. In light of the organization's compensation philosophy, employers might adjust salaries for some roles to be competitive with the market.
How to get market salaries
You get market salaries from salary surveys. Finding the right positions can be substantially aided by "benchmarking" several common positions in the sector.
Good salary surveys group data according to criteria such as location, type of company, staff size, and budget size. These kinds of information help participating organizations match up with the organization's "profile". A composite average that profiles the organization can be built using the data from these groupings.
Use market salaries to determine fair market wages. You can use the following steps to determine fair market value for roles within your organization.
Developing a job description
Create a thorough job description for the position that you want to fill. Do not rely solely on the job title to determine the compensation package. Consider the role's responsibilities and requirements. Accordingly, the pay should vary because, for instance, the job title "account representative" may involve varying degrees of responsibility depending on the organization.
Conduct a Salary Survey
Contact the human resources divisions of comparable organizations to conduct a market analysis. Use written or telephone surveys to get what other business pay employees in comparable positions.
Set Salary Ranges
When determining an average compensation, take into account the pay range in the salary surveys. Decide on minimum, midrange, and maximum pay ranges for each pay grade. Often, employers place the midpoint of a wage range between the 25th and the 75th percentiles. If an employer wants to be competitive, they might utilize the 50th percentile, the median, the mean, or the mode.
Incorporate nonmonetary factors into your overall wage package
Perks like a company car and benefits like health insurance affect the value of the whole pay package. If these perks are valuable to the potential employee, your organization may be able to attract workers.
Five ways market salaries can help you maximize your compensation plan
Market Salaries: Help align your business strategy and compensation plan
A company can attract and keep employees with the right compensation strategy. Compensation plans can be developed and managed in various ways depending on the corporate objectives. However, to be effective, they must support the firm's objectives.
Using market salaries is a crucial step in developing a successful compensation plan. It promotes informed decision-making. Market salaries enable you to determine the benefits and drawbacks of your organization's compensation plan.
Market Salaries: Help reward your talent competitively
Pay attention to how the complete compensation package for the entire workforce is positioned in the market. Consider the positions that are essential to the business's future success. Understanding the market worth of desired positions is essential.
Market Salaries: Help optimize spending and incorporate flexibility into your pay approach
In addition to adopting new working practices, many firms realize the need to foster a flexible culture. The design of plans needs to be more flexible and quickly adapt to shifting market conditions and labor demands. This is done through initiatives that reward talent equally and fairly and improve employee satisfaction.
Market Salaries: Help Stay up to date on rapidly changing market practices
According to a most recent Salary Budget Planning Report, many organizations worldwide have exceeded their salary budgets over the previous two decades. 60% of businesses reported that their overall pay increased in 2022 compared to 2021. Staying up to date with the market salaries helps you to identify temporary and permanent adjustments to meet the market.
Making fair and competitive wage decisions using market salaries helps stop behaviors that might unintentionally harm employee morale and long-term corporate reputation.
Using market salaries can help understand the state of the labour market and provide insight into suitable remuneration structures. Market salaries help stay up to date with the changes in the market hence rewarding your employees in line with the market.