What is salary benchmarking?

Salary benchmarking: Understanding the UK market outlook

In today's UK job market, a perfect storm is brewing. Economic uncertainty and rising inflation have left many workers feeling stagnated and stuck in their current roles. While 43% of employees are eager to move for higher pay, and the UK started the year with a better economic short-term outlook, fears around uncertainty are keeping workers in place.

With 72% of the UK workforce nervous about leaving their jobs due to economic uncertainty, it's clear that businesses need to offer something truly compelling to alleviate these nerves and attract top talent. Salary benchmarking can be the key to driving movement in the labour market and ensuring your organisation stands out.

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What is salary benchmarking?

Ever wondered if you're paying your employees enough or too much? That's where salary benchmarking comes in. It’s a strategic process used by businesses to determine the appropriate compensation levels for their employees. It's like checking your grades against the class average – you want to make sure you're on par with your competitors. By comparing your salaries to industry standards, you can make sure you're offering competitive pay to attract and retain the best talent.

Why do businesses need salary benchmarking?

Our recent research, digging into the influencing factors behind career moves, revealed:

• Salary is a top priority: 54% of job seekers consider salary to be the most important factor when looking for a new gig.
• Salary transparency is key: 51% of candidates believe that salary transparency is crucial during the application and interview process.
• Pay dissatisfaction: 31% of employees aren't happy with their current salary.

Let's face it: no one wants to lose their top talent to a competitor. And one of the biggest reasons employees jump ship is for better pay. That's where salary benchmarking comes in. It's like having a crystal ball that lets you see what other companies are offering.

So, if you want to keep your team happy and motivated, it's time to take a hard look at your compensation packages.

By knowing what the market is paying, you can:

• Attract and retain your best people: Competitive salaries are essential for attracting and retaining top talent. By understanding market rates, companies can avoid losing employees to higher-paying competitors.
• Demonstrate employee value: Salary benchmarking helps businesses demonstrate the value they place on their employees, fostering a positive work environment and boosting morale.
• Stay competitive: Accurate salary benchmarking can give companies a competitive edge in the recruitment market, allowing them to attract the best candidates.
• Control cost: By setting appropriate salary ranges, businesses can control costs while maintaining a competitive compensation package.

Ensure compliance: Salary benchmarking helps companies comply with labour laws and regulations, mitigating legal risks.

Benefits of salary benchmarking

• Unique selling point for potential employees: Competitive salaries can be a major selling point for potential candidates. Regularly comparing your pay and benefits package alongside competitors gives you the chance to adapt your salary ranges and offers according to market demands and trends, so you can attract the very best.
• Improved retention rate: Fair compensation can help retain top talent and reduce employee turnover. By salary benchmarking, you can ensure that employees are compensated fairly, reducing the risk of pay disparities and promoting employee satisfaction.
• Identifies opportunities for improvement: Benchmarking can highlight areas where the competition might be outperforming your organisation and vice versa.

How to do salary benchmarking

Let's cut to the chase. Salary benchmarking can feel like a minefield, but it’s much simpler than you think – essentially comparing your company's pay to what others are offering in your industry. And we’ve made it easy for you to get started with our up-to-date salary guides.

Get started with salary guides

Here's a simplified breakdown of the process:

1. Identify your peers and relevant benchmarks: 

Who are you competing with for talent? Consider how region impacts pay for the roles in your industry, alongside factors such as your competitors' company size.

2. Gather the data: 

This is where our salary guides come in handy. We've done the legwork for you by collecting and analysing data from hundreds of roles across 15 sectors in the UK.

3. Compare and contrast: 

Take a look at our guide and see how your current salary offers stack up. Are you offering competitive pay? Are there any areas where you might be falling behind?

4. Make adjustments: 

If you find that your salaries are lagging, it's time to make some adjustments. This could mean increasing pay, offering better benefits, or even restructuring your compensation packages.

Remember, the goal of salary benchmarking isn't just to match the market. It's to ensure that you're attracting and retaining top talent. By using our salary guides, you can make informed decisions about your compensation strategy and stay ahead of the competition.

Where does our UK salary data come from?

The salary data used in our guides is based on extensive research and analysis of thousands of placements made by Michael Page over the past three years. Our team of recruiters across the UK provides valuable insights into local market trends and helps us ensure that the salary bands accurately reflect current conditions.

Why choose the Michael Page 2025 Salary Guide?

• Comprehensive data: Our guide provides detailed salary information for a wide range of industries and job levels.
• Market insights: We offer valuable insights into market trends and candidate sentiment, helping you make informed decisions about compensation.
• Time-saving: By using our guide, you can save time and effort by avoiding the need to gather data from multiple sources.

Our 2025 Salary Guides have all the data you need. Get insights, save time, and make better hiring decisions. Download now:

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