Salary Benchmarking is the act of gathering information and insight on salaries and benefits against your industry and competitors. Accurately performing salary and benefits benchmarking enables businesses to avoid common hiring mistakes related to cost, geography and cultural differences. It also allows your company to be highly competitive in any given market.
In this article, we are going to discuss the benefits of salary and benefits benchmarking. We will outline the primary benefits of accurately performing a high-quality benchmarking service and what to expect.
We have a history of successfully consulting businesses on the hiring side of their expansion plans, alongside our partners, usually assisting with first-person/first-team on the ground. Salary benchmarking can help reduce the costs of expanding and help you understand the roadblocks and common issues with expanding and hiring in new territories. Benchmarking will also allow you to be competitive in the hiring market and help attract the highest quality talent on the market.
[Benefit 1] Better understand the costs of expanding into a new geography
One of the main costs for any business expanding into new geographies is a new employee or team. Salary and benefits benchmarking can help you weigh-up your options when it comes to choosing your target expansion country and what to expect when you start the hiring process.
Understanding the base salary for a new employee is one piece of the puzzle. We would advise using a benchmarking service that provides extra information to help you build the full picture when it comes to hiring in a new country.
Some things that are vital to understanding hiring in your chosen geography:
- Cost of salary and bonuses
- Cost of benefits packages (healthcare, pensions, car allowances etc.)
- Understanding of cultural and societal nuances (local holidays, language competency personal holiday allowances, local employment laws and policies etc.)
- Time and cost related to onboarding (time to effectiveness and understanding how to reduce time waste and cost)
- Local working hours
- Local taxes and fees
[Benefit 2] Attracting better quality candidates
By understanding what a competitive package looks like in your target geography, it allows you to position yourself in a strong position to attract the highest-quality talent. Without salary benchmarking, companies often drastically overpay/underpay salaries as they benchmark against internal packages in existing geographies.
Salary will be one of the primary driving forces behind candidates employment decisions but having an understanding what benefits are standard, as well as understanding which non-mandatory benefits are highly sought after, can also give you an edge.
As an example, in Thailand companies offer the opportunity to receive paid MonkHood leave and Marriage contributions. These are desired non-mandatory benefits. It shows the candidates that you are flexible, but also shows an understanding of the Thai culture.
[Benefit 3] Reduce attrition and maintain your best performers
Salary and benefits benchmarking can be crucial in maintaining your best employees and drastically reducing attrition across your business. In this age of information and interaction, employees know how their salary compares to friends, colleagues and family. Feeling underpaid and undervalued is one of the primary reasons employees look for alternative employment opportunities to increase their income.
By effectively salary benchmarking in your chosen geography, and also against your competitors and sector, you allow your business to keep salaries and benefits packages competitive and can drastically reduce attrition within the business.
Salary is not the only factor in high attrition levels. We will be discussing the other factors in more detail in a future article.
Salary and benefits benchmarking are crucial to gain a deep understanding of your financial position when entering new geography. Benchmarking, when done correctly, can also offer deeper insight into cultural, local nuances that would usually be overlooked when hiring in new territories as discussed.
Contact the team to get your first salary benchmark report for free.