As the Indian economy has recovered from the pandemic and companies have started operating in the new normal, tangible benefits have again overtaken work-life balance as the driving force for employee satisfaction in the country.
Most of the companies have been quick to realise that compensation and benefits are vital components in attracting, motivating, and retaining talent. However, how do the companies ensure that their compensation packages remain competitive and aligned with the industry standards? This is where compensation and benefits benchmarking comes into play. Understanding the significance of benchmarking and implementing it efficiently is one of the best ways for companies to gain a competitive edge in talent acquisition.
Understanding Compensation & Benefits Benchmarking
Compensation and benefits benchmarking involves an organisation’s assessment of its own compensation practices against industry standards along with market trends. The purpose is to gain insights into about how their own benefits stack up against their competitors. The benefits are multifold:
1. Provides a competitive advantage to companies by ensuring that their packages remain attractive for the top talent in the market. This helps them stand out and attract the right candidates.
2. Benchmarking helps a company retain its top performers. By identifying the gaps, companies companies can make necessary adjustments to reduce the risk of turnover
3. This also enables cost optimization. By evaluating compensation and benefits, companies can ensure that these are in line with their goals and budgets, avoiding overpayment as well as underpayment.
4. Benchmarking, along with corrective actions, contributes to employee satisfaction and engagement. Offering fair and best-in-class compensation fosters a sense of value and motivates employees to perform at their best, leading to increased productivity.
Key Considerations in Compensation & Benefits Benchmarking:
Any company that wants to carry out compensation and benefits benchmarking needs to remember that data accuracy and reliability are crucial. Using credible sources relevant to the industry is important, as is comparisons with companies that operate at the same level, domain and geography. Local market dynamics play a huge role in compensation benchmarking as what works in one location may not work in another. Benchmarking also needs to take into account the nuances of different roles and levels within the organization to ensure meaningful comparisons.
In the competitive Indian recruitment landscape, compensation and benefits benchmarking have become indispensable for companies seeking to attract and retain the best talent. By ensuring that compensation packages remain competitive and aligned with industry standards, companies gain a strategic advantage. Pasona India has taken a lead role in conducting relevant, accurate, complete and unbiased compensation and benefits benchmarking surveys to ensure a win-win scenario for both companies and employees. Post benchmarking, we help companies design effective competitive compensation structure and policy in line with current laws of the land and company requirements.
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