Salary Benchmarking Software, also known as Compensation Benchmarking Software, uses data analysis to recommend appropriate compensation for a particular position depending on its job title and description. These tools compare internal and external data sources to determine an equitable salary based on factors like necessary skills, competitor salaries, etc.
Salary benchmarking helps businesses tailor their compensation strategy to their business’s specific needs. This aids with retaining top performers and mitigating potential legal risks from underpaying employees.
Salary benchmarking solutions may offer other data services or salary surveys including pay equity software, which facilitates internal audits to determine whether an organization is paying fairly based on demographic factors and protected identities.
They also offer compensation management software, which helps managers design comprehensive compensation packages and identify broad trends across an organization.
To qualify for inclusion in the Salary Benchmarking category, a product must:
- Calculate an appropriate salary based on market prices
- Create compensation bands or salary ranges for roles based on their job title, description, and other factors
- Adjust salaries continuously as factors change
- Prepare reports, break down factors, or generate written paragraphs of rationale to increase pricing transparency to internal or external stakeholders
