Offering competitive pay helps you retain top talent, reduce turnover, and strengthen your company’s reputation. A salary competitive analysis shows if your compensation is in line with what other companies are offering—here are some tips to get started.

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Use the best tools for salary benchmarking

Using a variety of data sources will help you get a more accurate picture of the market. Combining multiple sources will help you avoid skewed results and give you a well-rounded view of where you stand.

Here are the best data sources to use:

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Conduct a job analysis

Once you’ve gathered market data on compensation, you need to collect and analyze information about each position in your company. A job analysis considers the responsibilities for that position and the experience required to perform it.

You can gather this information by talking to your employees, observing the kinds of duties they perform, and conducting surveys. This information will help you come up with a detailed job description.

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When it’s time to share your compensation structure, be open with employees and job candidates.

Set a pay range for each position

Once you have market data on the different job positions, you can create salary ranges for each position. It's a good idea to have three different salary ranges—a minimum, midpoint, and maximum. These ranges account for differences in experience and performance.

For instance, entry-level employees can be brought into a position near the minimum pay range. This gives that person an opportunity to develop their skills and earn more money as their performance improves.

It’s also important to assess pay equity across your entire organization. Look for patterns that may indicate gender, racial, or other inequities.

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Factor in non-salary compensation

Salary is just one part of the total compensation package you offer your employees. To offer a truly competitive package, consider the value of:

  • Bonuses, commissions, and profit-sharing.
  • Stock options or equity.
  • Health insurance contributions.
  • Retirement plan matching.
  • Paid time off, remote work options, wellness benefits, and tuition assistance.

Communicating the full value of these benefits helps candidates and employees understand the complete picture, even if the base pay isn’t the highest on the market.

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Be transparent

When it’s time to share your compensation structure, be open with employees and job candidates. Most people want to know what the role pays and how that pay was determined.

Train managers on how to communicate pay ranges clearly and confidently. Equip them with talking points and guidance on when to involve HR. Transparency builds trust and helps employees understand how they can grow within the company.

Re-evaluate frequently

Employee compensation is not static and is constantly changing with the market. You need to re-evaluate your compensation structure every two or three years, at the very least. This will ensure your pay scale is in line with what other companies are offering and will help you attract and retain highly qualified employees.

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What to do if your salaries aren’t competitive

If your analysis shows that your pay is below market, it’s important to take action since even small steps can make a difference. Start by identifying the biggest gaps, especially in roles that are hard to fill or experiencing high turnover.

If your budget doesn’t allow for immediate salary increases across the board, consider phasing in raises over time or offering one-time retention bonuses. You can also strengthen your total compensation package by improving non-salary benefits like remote work or professional development opportunities.

Be transparent with your team about the changes you’re making and why. Letting employees know you’re aware of the issue and actively working to address it can go a long way toward improving trust.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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