Why Salary Benchmarking Should Be an Ongoing Priority for Companies and Their HR Leaders

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Salary benchmarking — the process of comparing an organization’s pay levels, in their industry, with the wider market — is increasingly becoming a business necessity. From salaries to bonuses to benefits and perks, exactly what and how much employers include in compensation packages for workers plays a pivotal role in their ability to attract, retain and motivate skilled talent at all levels of the business.

The upsides of effective salary benchmarking for employees include helping them feel more confident they are being compensated appropriately and their work is valued. This knowledge can have an impact on their overall job satisfaction. Workers can also gain a clear understanding of the skills, experience and responsibilities required to move to the next pay level or position in the company. That insight can keep them engaged and inspired to pursue professional growth and seek promotions.

At the senior management level, salary benchmarking is necessary to meet executives’ high expectations for compensation. The packages they receive often go beyond base pay and feature a customized mix of short- and long-term financial rewards, incentives tied to performance, and compelling perks and benefits, from flexible work options to enhanced healthcare.

If a company — and more specifically, its chief human resources officer (CHRO) or other top HR executive — fails to benchmark these components, the business may face challenges in retaining and hiring leaders.

Compensation benchmarking doesn’t just impact individual employees, though — it is also a crucial factor in an organization’s overall budgeting and financial planning processes. Whether a business is going through a growth phase, a restructuring or planning to diversify its operations, aligning pay scales with current market trends helps ensure payroll costs remain sustainable.

The process also helps bring to light the existence of pay gaps that can create reputation and brand damage, legal and compliance risks, and diversity and inclusion challenges — to name only a few potential issues.

The responsibility for spearheading salary benchmarking efforts often falls to the CHRO or other HR leaders in the business, who are uniquely positioned to manage this process given its close connection to HR strategy. The direct involvement of the company’s HR experts in evaluating compensation packages and salary ranges can also provide business leadership with greater confidence that the firm’s offerings are competitive according to its industry, geographic location, size and more.

Based on research for the 2025 Salary Guide From Robert Half, many employers are preparing to rely even more heavily in the year ahead on using compensation as a tool to secure in-demand talent. In a Robert Half survey, 93% of U.S. hiring managers at organizations of all sizes said they are confident their company will offer raises on base salaries. And more than half (52%) of hiring managers reported that increasing compensation will be their top strategy for enhancing employee retention in 2025.

The upshot for CHROs: Now may be an ideal time to initiate a salary benchmarking project if you don’t already have one underway. If you’re an HR leader who is new to benchmarking salaries or just want to confirm you have a sound process in place, consider using these four steps to help guide your approach.

Key Steps to Enable Effective Salary Benchmarking

Gather reliable data
Analyze market trends and internal data
Involve stakeholders and get buy-in
Conduct compensation benchmarking regularly

The first step is to collect the most up-to-date salary data available from trusted sources that provide this information, such as salary surveys, industry and market data reports, and government databases. Market insights and compensation trends information provided to the company by reputable executive search consultants as part of a recent or ongoing retained executive search can also be valuable for benchmarking salaries for senior-level positions. Search firms can provide you live data from senior executives at comparable firms and even the competition.

Robert Half’s Salary Guide is a starting point for research for many HR leaders benchmarking salaries for the organization. Our proprietary data helps both hiring managers and professionals engage in more informed and productive salary discussions. (Learn more about the salary benchmarks we use in our guide.)

When gathering salary data, be sure to include sources that offer industry-specific insights. For example, if you’re a CHRO at a technology company, you’ll want to closely review salary and hiring trends specific to the tech industry. Robert Half’s online Salary Guide can help: It features starting compensation for seven professional fields, including technology, in an easy-to-navigate format.

Look into what types of salaries competitors are paying for roles critical to your business to make sure your organization’s compensation levels are either on par, or better. Online job boards and websites with crowdsourced salary data can offer a wealth of information. If your budget permits, you might also want to consider commissioning a customer survey of salaries that gathers compensation data directly from competitors or companies of similar size and scope.

Data analysis is your next step in the salary benchmarking process. That work includes comparing external market trends with your organization’s current compensation structure. For this effort, you’ll need to examine key roles within the company and identify where pay gaps exist between what the business offers and what the market suggests is appropriate.

In your analysis, be sure to consider not only starting salaries but also total compensation packages, including bonuses, as well as benefits and perks. Identify areas where the company may need to adjust its pay structure to remain competitive or address potential equity.

If data analysis sounds like a daunting task, tools like the ones listed below can help make the process more automated — and thus, streamlined and easier. (Some can also help with data collection.)

HR information systems (HRIS), which you can use to manage employee compensation data and integrate external benchmarking data to analyze current pay scales within the company. Many of these platforms allow you to dig deep into “people analytics” like employee demographics, performance and engagement.

Compensation management software, which provides capabilities for benchmarking salaries, modeling compensation scenarios and aligning pay with market rates.

Data analytics tools, which can help you analyze large datasets, visualize trends and create reports comparing internal pay structures with external benchmarks.

Another resource: Robert Half’s 2025 Salary Calculator

Robert Half also offers a simple but powerful tool to help you quickly understand how much your company should pay for certain roles in the year ahead: our 2025 Salary Calculator.

Just enter a job title and city in the online tool’s designated fields, hit the “Search salaries” button, and the results will include salary range details as well as a job description outlining typical requirements and duties for the role you selected.

You can use Robert Half’s Salary Calculator to access market salary ranges for over 450 positions.

Salary benchmarking shouldn’t happen in isolation in the HR department. CHROs need to collaborate with other key stakeholders in the business, including finance leaders, executives and even department heads. This helps to ensure the process is transparent, aligned with organizational goals and produces outcomes that meet the needs of the company and its employees. Plus, department heads and managers often have insights into specific skills, roles and market factors that impact their teams.

By presenting data-backed recommendations to senior leaders, you will be better positioned to secure buy-in for new pay structures. With direct input from stakeholders, you can be more confident that the company’s compensation policies are aligned with both market trends and the company’s financial and strategic priorities. You can also receive help in communicating those changes to the broader organization, which helps foster employee trust.

Collaborating with stakeholders on a compensation benchmarking project also drives a more holistic approach to total rewards. HR leaders can gain a deeper understanding of the nonmonetary benefits, perks and incentives most important to employees, and even to teams in different departments. For example, you may find that flexible work is a top priority for workers in the IT department while sales team members place more value on performance bonuses.

Once data has been analyzed and stakeholders are on board, you can get to work on establishing competitive and sustainable salary bands and pay scales. Your business might use one or both tools, depending on how its structured and tailors its compensation strategies.

Regular reviews of salaries, perks and benefits — whether annually or biannually — can help organizations stay ahead of shifts in the labor market, avoid falling behind on salary trends and address pay gaps more proactively. This process can also help CHROs and other senior leaders gauge the effectiveness of the company’s total rewards program for employees and determine where and how to adjust salaries, incentives, perks, and more.

As the volume and diversity of available benefits and perks grows, be sure to customize offerings accordingly. Here again, our Salary Guide can be a valuable resource for staying attuned to the latest trends. It offers detailed information about benefits and perks, including what employers typically provide and what workers prioritize most.

Take an informed approach to salary benchmarking

Salary benchmarking is a critical component of a successful HR strategy. No matter where you are in the process, take a moment to consult Robert Half’s 2025 Salary Guide to confirm your organization is prepared to pay competitive compensation to top talent in the year ahead.

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