How salary benchmarking shapes competitive pay

Use salary benchmarking data to your advantage. Benchmark roles, set competitive pay, and stay ahead in today's hiring market. Contact our team to learn how it works.

• What is salary benchmarking? Salary Benchmarking or pay benchmarking is a service that compares salaries and benefits against local expectations, helping businesses make informed decisions around remuneration when expanding into new markets. This ensures fair pay aligns with economic conditions and considers legal and ethical factors.
• Why is pay benchmarking important? 9 in 10 workers highly value compensation and an equitable workplace. Salary benchmarking helps to ensure workers feel valued and fosters an equitable workplace. This creates a fair and transparent working environment. Pay benchmarking also improves compliance, mitigates risk and boosts overseas success.
• How can Mauve help? With almost 30 years of experience in global expansion, Mauve Group’s salary benchmarking service offers comprehensive data to help your business make smart decisions when it comes to remuneration

The world of work is more competitive than ever. New working models and evolving employee preferences are driving innovation on a global scale. Services such as Employer of Record and Salary Benchmarking make it easy to expand into new locations and source the ideal talent for your operation.

Ease of access to broader talent pools and new markets make global growth an exciting and necessary step for businesses at all levels, even start-ups and SMEs.

However, businesses seeking to recruit and pay staff overseas need to remember that compensation is key to attracting and retaining top talent when hiring abroad.

According to a recent research report by SHRM, What global workers want and the global worker experience, internationally, approximately 9 in 10 workers rated good pay and benefits as very or extremely important to them in a role.

Salary benchmarking, also known as pay benchmarking, is a vital tool in this process. By comparing pay rates for similar roles across industries and regions, businesses can design compensation packages that reflect market conditions. They can also comply with regulations and motivate employees to reach their potential.

For more information, read our Ultimate guide to salary benchmarking.

What is salary benchmarking and how does it help?

Salary benchmarking involves a team of experts benchmarking salaries and benefits packages against local averages, on behalf of a client, in the location where the client wishes to hire staff.

The experts then compile a report. This report features details and analyses the economic situation, wage brackets, mandatory and preferred benefits. This report also features the relevant legal and ethical considerations.

Attracting and retaining top talent

As the SHRM report attests to, what workers want varies by country. However, all 16 of the surveyed countries highly valued good pay and benefits, or a work environment in which people are treated fairly and respectfully.

According to studies by Glassdoor and the Harvard Business Review, higher salaries motivate 45% of employees to work harder. This means greater employee commitment and loyalty, driving retention.

Offering competitive pay and benefits not only attracts skilled workers. It also makes them feel valued and drives equity in the workplace. This fosters an environment of fairness and respect which in turn elevates your business’s reputation.

Supporting fairness and transparency

Salary benchmarking takes into account local data such as gender, race, or disability pay gaps when recommending salaries. By highlighting areas of inequality, salary benchmarking allows organisations to offer equitable salaries and ensure that everyone receives fair and consistent remuneration.

This transparency reduces dissatisfaction and strengthens trust between staff and leadership.

Enhancing compliance and mitigating risk

Employment and pay legislation can vary widely between countries. Benchmarking helps organisations remain compliant with laws relating to minimum wage, statutory benefits, and other regulatory requirements. In international markets, this reduces the risk of fines, disputes, and reputational harm.

Informing strategic decisions

Accurate benchmarking provides senior leaders with valuable data for workforce planning. It helps HR teams identify where pay gaps exist and where adjustments are needed. It also helps teams to decide how compensation structures can support broader business goals.

Key elements of salary benchmarking

When carrying out salary benchmarking, organisations must consider several factors to ensure accuracy and relevance.

Job role clarity

Before benchmarking pay, roles must be clearly defined, with responsibilities and required skills outlined. This ensures comparisons are made against equivalent positions.

Industry and sector relevance

Salary benchmarking tools should use data collection on salary trends from the same industry or closely related sectors. Set salary ranges for the same job title can vary significantly across industries. So, when gathering salary information and determining pay ranges, it is important to use accurate data sources and salary surveys to offer competitive salaries.

Geographic location

Compensation is strongly influenced by local cost of living, market demand, and regional economic conditions. Standard salaries in London, for example, may be very different from those in other UK regions.

Total reward package

Conducting salary benchmarking is about much more than just estimating base salary. It should also include all legally mandated and preferred benefits, including pensions, health insurance, holiday allowances, and performance bonuses.

Regular updates

Savvy business leaders are in no doubt that the job market evolves quickly. Conducting benchmarking on a regular basis helps organisations stay aligned with changing trends and expectations.

Benefits of salary benchmarking for businesses

Stronger recruitment outcomes

By offering competitive pay, businesses can attract high-quality candidates faster and reduce the risk of rejected offers.

Reduced employee turnover

Fair and market-aligned salaries increase employee loyalty, reducing costly turnover and improving workforce stability.

Improved morale and performance

When employees feel they are compensated fairly, motivation and productivity levels rise. This can lead to better overall business performance.

Employer brand reputation

Companies known for fair pay and transparency build stronger employer brands. This reputation attracts talent and supports long-term growth.

Salary benchmarking in a global workforce

For organisations with international employees, salary benchmarking becomes even more complex but also more essential. Global benchmarking must take into account local employment laws and statutory benefits. It needs to consider variations in currency exchange and inflation. Cultural expectations around pay, bonuses, and benefits, as well as industry-specific trends across multiple regions also come into play.

A strong global benchmarking strategy ensures consistency while respecting local differences. This balance supports both compliance and employee satisfaction.

Why Mauve Group’s salary benchmarking service is right for you

Some organisations view salary benchmarking as an additional expense. In reality, it is a strategic investment that prevents higher costs associated with poor retention, unfilled vacancies, and non-compliance penalties. The insights gained from benchmarking empower organisations to make data-driven decisions that improve efficiency and long-term performance.

Salary benchmarking is a critical element of shaping competitive and fair compensation packages. By aligning pay structures with industry standards and local expectations, organisations can attract top talent, retain their best employees, and ensure compliance across all markets.

Mauve Group has over 30 years of experience in global workforce management and offers tailored solutions to help businesses implement effective salary benchmarking strategies. With a network spanning more than 150 countries, Mauve provides the local expertise, market data, and compliance insight needed to design competitive and transparent compensation packages. By partnering with Mauve Group, businesses can be confident that their pay structures are both fair and strategically aligned with their global growth goals.

Frequently Asked Questions

1. What is salary benchmarking and why is it important?

Salary benchmarking is the process of comparing compensation packages against market standards. It ensures fairness, competitiveness, and compliance while supporting recruitment and retention.

2. How often should salary benchmarking be conducted?

Ideally, benchmarking should be reviewed annually, or more frequently in fast-changing industries, to keep compensation aligned with market trends.

3. Does salary benchmarking only cover base pay?

No, effective benchmarking includes the entire reward package such as bonuses, allowances, pensions, health insurance, and other benefits.