There is a familiar conversation that happens in some organisations every year. Someone from HR presents the latest compensation and benefits benchmarking report.
The market has moved. Competitors are paying more for certain roles. Some salaries are sitting below the market range. Benefits have changed. And then someone asks the question that often determines where things go: “How much will this cost us?”
At CarvinClay, we believe this is a fair question. However, if that is where the conversation ends, your organisation may be missing the bigger opportunity.
Because compensation and benefits benchmarking is more than a cost exercise, it’s a talent strategy. It should not only tell you what the market is paying. It should help you decide what kind of talent strategy your organisation needs or even employees to lay off or retain.
Consider a company in Ghana trying to hire a strong finance professional. The organisation has a carefully structured salary scale and believes its package is competitive because it has been benchmarked.
But the candidate has another offer. The competitor is offering a higher base salary, better health cover, a more flexible working arrangement and a clearer path to progression.
The organisation responds:“But our salary is at the market median.” That may be true. The candidate may still leave. This is where benchmarking becomes more than a numbers exercise. The question isn't simply whether your salary is aligned with the market.
It is whether your overall reward proposition is compelling enough for the talent you need.
The market rate may not necessarily be the right rate for you: One of the easiest traps in benchmarking is assuming that there is one “correct” market rate.
There isn't. A market benchmark gives you a reference point. It doesn't make the strategic decision for you. For example, imagine two organisations in the same industry.
One is a large, established business with a strong employer brand and relatively stable operations. The other is a growing company trying to build a new digital business and competing aggressively for scarce technology talent.
Should they necessarily have the same reward strategy? Probably not.
The second organisation may need to position certain roles differently because the cost of failing to attract those capabilities could be much greater than the additional compensation required to secure them.
Dear organisations, health insurance matters, pension matters, leave matters, flexibility matters, learning and development matters and so does the ability to manage work alongside life outside the office.
The answer to benchmarking is not to copy every benefit another company introduces. If one competitor offers a particular perk, it does not automatically mean your organisation should introduce it.
Even more beneficial is that, done properly, benchmarking can uncover issues that are easy to miss internally, perhaps employees are leaving despite being paid reasonably well.
Perhaps the organisation is spending money on benefits that employees barely use while overlooking benefits that would genuinely improve attraction and retention.
They can be signals about job design, career progression, employee experience, organisational culture and talent risk.
In doing all these, organisations must remember that If people don't see a future in the organisation, don't trust their leaders, don't feel recognised or cannot see how they can grow, increasing their salary may only delay the inevitable.
About Carvin Clay
CarvinClay is a people and leadership company that helps organisations build capability that lasts. We partner with boards, leaders and HR teams to shape strategy, culture and capability that drive real performance. Rooted in global experience and African insight, we bring clarity, depth and innovation to how organisations grow their people and sustain transformation.
Website: www.carvin-clay.com Email:
