Between Brexit, the pandemic, soaring inflation and interest rates, and the rise in energy prices, trying to maintain a fair and equitable approach to salaries without compromising on the performance of the business has been a delicate balance to maintain.
In this climate, companies also have to maintain their competitive edge. While the cost-of-living crisis is hitting their employees, it is also having a sometimes devastating effect on their own operating costs.
However, with sufficient forethought and planning, outside-the-box thinking and salary benchmarks, companies can use this time to refocus on operational costs and put in place initiatives that both help their workforce navigate the cost-of-living and sharpen up operations for an improved competitive edge.
What is Salary Benchmarking?
Benchmarking salaries in the UK involves the comparison of salaries across peer groups, industry sectors and the general marketplace. It is a highly valuable HR tool for both the recruitment of good talent and the retention of existing employees.
Its role during a cost-of-living crisis is crucial when established alongside a number of different initiatives, such as additional perks, flexibility in commuting options and one-off payments. We will explore these in more depth later in this article.
How to Benchmark Salaries in the UK
Gathering and comparing salary data across the UK is a complex and constantly changing process that needs to be constantly updated, making it a cumbersome and imprecise exercise for most employers. While some information can be drawn from job search websites and conversations within the industry, this still risks being a finger-in-the-wind comparison, which might do more harm than good.
For this reason, employers prefer to turn to salary benchmarking companies such as Paydata that specialise in keeping accurate, up-to-date HR salary benchmarking data for use across a range of different industry sectors, roles, and departments to help guide salary decisions.
Within a cost-of-living crisis, this information takes on extra resonance due to the often unpredictable and unstable economy in which everyone is working. The manner in which companies respond to the challenges caused by soaring inflation and interest in their employees is indicative of their attractiveness as a working environment. While the ability to pay household bills becomes more stressful as an individual employee’s disposable income shrinks, how a company deals with that stress is important. Salary is a crucial aspect of an employee’s sense of self-worth, but if salary benchmarks indicate that current levels are competitive, it does not make commercial sense to raise them further. Alternative options can then be put into place to ensure that individual employee’s distress is recognised and a solution put in place to protect them.