Benchmark – How to Use Market Compensation Comparisons
A compensation benchmark is a reference point against which a company evaluates its own compensation levels. It could be, for example, the median base salary from a survey for a given profession and region. When discussing compensation, it helps distinguish the company’s position in the market from differences among its own employees.
How to Choose a Reference
Compare the job description, seniority, region, and data collection date. Determine whether the source lists the base salary or total compensation, and which statistical measure it uses.
How to Explain the Value
Note the source and the validity period. If you’re using a broader market category for a highly specialized role, specify the difference in responsibilities that may affect the comparison.
Position with a monthly base salary of 54,000 CZK
The survey reports a median base salary of 60,000 CZK for a comparable full-time role. The company’s base salary for the same work schedule corresponds to 90% of the benchmark. The difference of 6,000 CZK serves as a basis for considering the salary range. When deciding on any adjustment, also take into account similar roles within the company.
Can the same benchmark be used for multiple branches?
Yes, provided the job roles are sufficiently similar and the relevant labor market is comparable. Otherwise, select a regional benchmark or explicitly describe how broad a market the data represents.
When reviewing market data, verify whether it represents an average or a median, and compare the compensation components included in the survey.
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How can you compare your compensation with the market?
Bring data from the survey you use. In this example, we’ll discuss how to enter a market benchmark in SmartFP and its significance for a specific position.
