As a hiring manager or business leader, you understand that attracting, securing and retaining top talent is a universal challenge, yet one of your most critical responsibilities. While robust interview processes, a compelling candidate experience, and a strong employer brand are fundamental, there is a sophisticated, often overlooked, element that truly differentiates leading organizations:
strategic salary compensation insights grounded in real-world market intelligence.
With shifting employee expectations, growing competition for skilled professionals, and a rise in remote and cross-border hiring, employers are under increasing pressure to get every aspect of their hiring strategy right.
Salary benchmarking gives decision-makers the data they need to make competitive offers. It helps hiring managers understand what the market is paying for specific roles, experience levels, and skill sets. More importantly, salary benchmarking gives you the insight and data to make more informed decisions about how you position your compensation.
You can align with the market and keep your salary consistent with what other companies are offering or lead the market and offer higher than average salaries to attract top-tier talent faster and fill difficult roles.
For companies hiring globally or scaling across regions, salary benchmarking becomes even more essential. It supports the development of consistent, equitable compensation structures across countries and departments, ensuring your offers remain competitive and fair, no matter the location.
Put simply, salary benchmarking is about understanding the market, staying agile, and making smarter decisions. Decisions that help you build and keep the teams that move your business forward.
In this article, we’ll break down why salary benchmarking matters, what happens when you ignore it, and how employers and hiring managers can use it to gain a meaningful edge.
What Is Salary Benchmarking?
Salary benchmarking is the process of comparing your company’s compensation packages, i.e. salary, bonuses, benefits, and more, against the current market data. This allows you to see:
• What the market is paying for similar roles.
• How your salaries stack up against industry norms.
• Where you might be overpaying or underpaying.
Remember that salary benchmarking covers more than just base pay. Today’s candidates evaluate total compensation, which includes:
• Bonuses and performance incentives.
• Equity and stock options
• Cash allowances and perks
• Medical and insurance benefits.
• Retirement contributions.
• Paid leave and vacation policies.
• Flexible work arrangements.
• Career development opportunities.
Salary benchmarking is often misunderstood as simply comparing base pay between companies, but in reality, it goes much deeper than that.
A proper salary benchmarking study involves a comprehensive analysis of the full rewards strategy that leading organizations use to attract and retain talent. It is not just about what is publicly advertised on job boards. It is about understanding how companies actually value their people across roles, functions, and geographies, using real, aggregated compensation data.
Here’s what a complete benchmarking process includes:
The Complete Compensation Ecosystem
Salary benchmarking looks at far more than just the monthly salary. It provides a view into the entire compensation package, including:
• Base salary.
• Bonuses and incentives.
• Equity and stock options.
• Benefits. (medical, retirement, insurance, etc.)
• Allowances and non-cash rewards
This gives hiring managers and employers a full picture of how organizations are structuring their offers across the market.
Typical Pay Mixes: Fixed vs. Variable
Another key component of salary benchmarking is understanding the pay mix. How much of a role’s total compensation is fixed versus variable (guaranteed salary vs bonuses, commissions, equity)?
Some industries rely heavily on incentives and performance pay, while others lean toward stable, fixed structures. Knowing these market norms helps employers stay aligned with what candidates expect, and gives them flexibility when structuring competitive offers.
Nuanced Role Definitions and Team Structures
It’s easy to assume that a job title tells the full story. But in reality, not all Marketing Managers, Software Engineers, or Data Analysts are created equal.
Across industries and organizations, the same title can represent vastly different scopes of responsibility, seniority levels, and team dynamics. That is why effective salary benchmarking goes well beyond surface-level job titles. It digs into the true shape of the role, how it functions in practice, and how it fits within the broader team and business structure.
For example:
A commodities trader in an independent trading house may be responsible for risk taking and third-party trading. A commodities trader in an integrated oil company may not be taking risks and focused on buying and selling commodities products for their own assets.
A Corporate Finance Manager at a startup may be expected to manage everything from FP&A to capital management to strategic planning, while in a listed company, they would manage a team covering these functions plus additional governance, regulatory and compliance responsibilities.
These subtle but crucial distinctions significantly impact compensation expectations. Someone overseeing a team, managing budgets, and influencing company-wide decisions will naturally expect a different package than someone operating independently in a narrower role.
Salary benchmarking done right takes this into account by:
• Mapping roles to the correct seniority bands based on scope and impact.
• Clarifying reporting structures (e.g. individual contributor vs. people manager).
• Contextualizing job responsibilities, not just titles.
• Comparing within function and industry, to avoid misleading cross-sector mismatches.
This level of role clarity and structural insight allows hiring managers to align compensation with market reality and ensures internal consistency across similar roles within the organization.
When organizations overlook this nuance, they risk overpaying for junior talent, underpaying experienced professionals, or creating internal pay inequities that erode trust and morale over time.
Market-Leading Perks and “Sticky” Benefits
In many cases, it is the perks, not the pay, that seals the deal. Leading companies are offering increasingly creative and compelling benefits that keep talent engaged and loyal.
These can include:
• Flexible and hybrid work policies.
• Education sponsorships.
• Wellness stipends.
• Sabbatical options.
• Mental health support.
Salary benchmarking often surfaces these “sticky” benefits, the ones that don’t always show up in a job listing but make a big difference in employee satisfaction and retention.
Benchmarking vs. Generic Salary Surveys
It is important to distinguish proper salary benchmarking from generic salary surveys or online averages.
• Salary surveys are often self-reported, inconsistent, and limited to base pay.
• True benchmarking uses aggregated, verified data across multiple companies, filtered by industry, company size, region, and job scope.
• It provides contextual insights, not just numbers, helping you make informed decisions that align with your business goals and talent strategy.
It equips hiring managers and employers with the insights needed to build stronger, more competitive compensation structures that reflect both market reality and strategic intent.
Why Salary Benchmarking Matters
Top candidates evaluate the entire value proposition of an offer, not just the base salaries. If your compensation package doesn’t stack up across the board, you’re already at a disadvantage even before the interview starts.
Yet many organizations operate with blind spots by relying on outdated internal salary bands, historical pay rates, or generic publicly available data. These blind spots can cause you to unintentionally underpay, overpay the wrong profiles, or misalign your offers with what the market really values.
This is where in-depth salary benchmarking makes all the difference.
When your total compensation package is aligned with current market expectations, you are far more likely to attract:
• Highly skilled professionals who know their worth.
• Passive candidates who are not actively job hunting but might be persuaded by a compelling offer.
• Top talent from competitors who are ready to move for the right mix of salary, growth, and benefits.
• Diverse, high-quality applicants across regions and industries.
On the flip side, offering below-market compensation instantly reduces your appeal. It narrows your candidate pool, delays hiring timelines, and, in many cases, attracts less-qualified applicants who are settling, not choosing you for the right reasons.
Why Salary Benchmarking Matters
One of the most frustrating and costly problems for hiring managers is having a great candidate turn down your offer.
Often, the role is right. The team is right. The timing is right. Yet, the offer falls short.
In many cases, candidates decline not because of the culture or opportunity, but because the compensation simply does not meet their expectations. And by the time you circle back with a revised offer, they have already accepted another one.
This is where real-time salary benchmarking becomes your best defence. With accurate, data-backed insights, you can craft offers that:
• Meet or even pre-empt market expectations.
• Feel fair, competitive, and tailored to the candidate’s level and location.
• Boost offer acceptance rates, especially among top-tier and passive candidates.
The impact is immediate:
• Faster hiring cycles with fewer delays at the offer stage.
• Fewer rejections that force you to start the process over.
• Less time and energy wasted, and more roles filled with the right people.
Retain Your Top Performers
Hiring is only half the battle. Retention is where most companies tend to struggle.
Without regular salary benchmarking, many companies unintentionally allow compensation gaps to develop over time.
Even your most committed employees will eventually take notice if they’re underpaid, especially when:
• Headhunters reach out with more attractive offers.
• Peers in the industry share their salaries.
• Morale begins to drop as pay disparities become known internally.
By the time you realise there is a problem, your top performer may already be walking out the door.
Support Fairness and Pay Transparency
Pay transparency is becoming a global trend. Many regions are introducing laws that require salary ranges to be disclosed in job postings.
Even in places without legal mandates, salary transparency is increasingly becoming the norm, with employees readily accessing information from diverse sources. These include global compensation platforms, industry-specific reports and crowdsourced salary websites, as well as through direct professional network and industry insights.
However, this increased transparency does not negate the need for rigorous salary benchmarking; in fact, it amplifies it. While public and easily accessible data can provide a broad overview, it often lacks the granularity, real-time accuracy, and comprehensive context needed for strategic compensation decisions. Without thorough benchmarking, simply being transparent can expose internal pay inequities or reveal that your structures are out of sync with the true market, leading to more questions and dissatisfaction rather than trust.
When your pay structures are backed by robust, well-researched market data rather than guesswork or outdated internal practices:
• You establish a genuinely fair and transparent pay system.
• You build trust with employees, who know their compensation is grounded in real market data, not arbitrary numbers.
• You can confidently communicate your compensation philosophy, mitigating internal salary inequity and proactively addressing concerns before they become sources of dissatisfaction and attrition.
• You create a more inclusive and equitable workplace, where transparency reinforces integrity and strengthens your employer brand in a highly visible market.
By the time you realise there is a problem, your top performer may already be walking out the door.
Smarter Budgeting and Workforce Planning
With accurate, up-to-date market data, you gain clarity and confidence to make smarter workforce decisions that support long-term business growth. When you know the current market rates for various roles, you can:
• Set realistic hiring budgets based on current compensation benchmarks, not outdated assumptions.
• Forecast total compensation costs across teams and departments with greater accuracy.
• Prepare for expansion into new roles, business lines, or geographic markets.
• Optimise your talent costs by aligning pay with performance, team structure, and market value.
Without solid benchmarking, you risk underestimating or overestimating labour costs, leading to budget overruns, hiring delays, or misallocated resources. This can stall growth, stretch teams thin, or result in rushed, reactive compensation decisions.
The Cost of Not Doing Salary Benchmarking
Many companies underestimate how damaging it can be to ignore salary benchmarking. But the risks are very real — and they compound over time.
- Longer Hiring Times
Without a clear understanding of market rates, your job offers may repeatedly fall short of candidate expectations. This leads to multiple rejected offers, drawn-out interview processes, and extended vacancy periods. The longer a role stays unfilled, the more pressure it puts on existing teams and operations.
- Losing Top Candidates to Competitors
Informed candidates compare offers. If your compensation package doesn’t meet the standard, they will accept offers from companies that do. And once you gain a reputation for offering below-market pay, words spread quickly within the talent pool, making future hiring even harder.
- Higher Employee Turnover
Even if you succeed in hiring good people, failing to keep salaries in line with the market means they are more likely to leave once better-paying opportunities come along. Replacing experienced staff is not only expensive but also disrupts team productivity and morale.
- Internal Pay Inequity and Discontent
When salaries are set without proper benchmarking, gaps often form between new hires and existing staff. Over time, this creates pay inequity that can lead to frustration, resentment, and distrust among employees. Once morale starts to erode, engagement and performance often follow.
- Damage to Employer Brand
These days, news about unfair or low salaries travels fast. Candidates openly share their experiences on platforms like Glassdoor and LinkedIn, and negative reviews can easily turn strong applicants away before you even get a chance to speak with them.
- Poor Workforce Planning and Budgeting
Without accurate salary data, it becomes difficult to forecast hiring costs or plan for salary adjustments. You may end up overspending on some roles while underpaying others, leading to inefficient use of your budget and potential financial strain as your business grows.
When it comes to salaries, mistakes rarely stay hidden for long. People talk, information spreads, and gaps get noticed quickly.
How Hiring Managers Can Start Salary Benchmarking
Accessing reliable compensation data is often easier said than done. Many organisations still rely on outdated internal salary bands, or generic, publicly available figures. While these sources may offer a broad picture, they often lack the granularity, accuracy, and strategic context required to make informed decisions, especially for executive-level roles.
That is where partnering with an executive search firm like Kepler Search can become a significant advantage.
Rather than relying on guesswork or static data, Kepler Search provides real-time, market-validated compensation insights grounded in on-the-ground engagement with top talent, hiring leaders, and industry shifts. Here is how:
- Proprietary Market Intelligence
• Regular engagement with candidates, hiring managers, and industry insiders.
• Aggregated compensation data, including incentive structures and emerging benefits trends.
• Real-time insights into what is driving candidate expectations and offer outcomes.
• A pulse on global talent flows across functions and geographies.
- Deep Understanding of Market Structures
• Clarity on how companies structure roles and reporting lines.
• Common variations in job scope, seniority, and responsibility.
• Benchmarking of typical pay mixes (e.g., fixed vs. variable, base vs. equity).
• Insight into how compensation decisions impact team design and business outcomes.
- Real-World Context and Negotiation Savvy
• Guidance on how to craft competitive offers that align with market expectations.
• Anticipating candidate counteroffers and hidden deal-breakers.
• Advising on timing, structure, and negotiation strategy based on recent hiring patterns.
- Strategic Talent Advisory
• Optimising salary structures to balance base, bonus, equity, and benefits.
• Assessing whether your perks and non-monetary incentives are keeping pace with the rest of the industry.
• Aligning compensation strategies with the broader global business strategy.
In short, Kepler Search helps organisations make data-driven, market-aligned, and strategically sound compensation decisions, not just to fill roles, but to build long-term talent advantage.
The Bottom Line: Salary Benchmarking Is No Longer Optional
Salary benchmarking has moved from a nice-to-have to a business necessity. The companies that get this right are not only able to attract stronger candidates but also hold onto their best people and protect their employer brand in the long run.
Hiring managers and employers who continue to rely on outdated assumptions or gut feelings will find themselves losing out. Not just in the hiring process, but in overall business performance.
Strong teams are built on fair, competitive, and well-informed compensation decisions. Salary benchmarking gives you the data to make those decisions confidently. If you want to stay competitive, protect your talent pipeline, and build a high-performing workforce, it is time to make salary benchmarking part of how you hire and manage your employees.
Katie Tu
