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July 31, 2025
Salary benchmarking helps employers stay competitive by comparing pay against the market, aligning offers with business realities, and using ongoing insights to attract and retain talent without overspending.
When was the last time you reviewed your starting salaries? For many employers, the answer is much less recent than would be ideal. Failing to regularly review your starting salaries can put a company on the back foot, forcing them to respond to take a reactive rather than proactive stance.
If you regularly find that prospective hires will counter with a higher salary request, this isn’t just a sign that job hunters are more bold in their search. It could be a sign that you aren’t competitive in your sector.
Salary benchmarking will help to ensure you outpace your competitors and are able to secure the best talent. If you want to avoid losing good candidates to your competitors, it’s high time you start benchmarking starting salaries. In this guide, we’ll explore how this practice can help you to stay ahead while also outlining how to do it effectively.
Regularly reviewing your starting salaries against competitors in your sector is essential for staying competitive.
This approach is not just useful for hiring in a candidate’s market, when there are more employers chasing fewer candidates. It’s also helpful when you are hiring in an employer’s market, when there are more candidates chasing fewer roles.
In this instance, it can help you to avoid offering starting salaries that are too high, which could result in employees having to wait longer for their first pay review.
Salary benchmarking is all about looking at what other employers are offering for the same role. It can also compare salaries for different roles, but with a similar level of seniority and educational level.
Finally, it’s also important to take into consideration the impact your staffing costs will have on operational costs. There’s little sense in looking to increase starting salaries if your current business operations won’t allow for this increase in spending.
| Topic | Key Point |
|---|---|
| What is salary benchmarking? | Comparing roles and pay with the wider market to keep offers competitive and sustainable. |
| When to benchmark | Continuously track salaries, not just when hiring, to avoid reactive decisions. |
| Market conditions | Effective in both candidate and employer markets to prevent under- or over-paying. |
| Data inputs | Use public sources, candidate feedback, counteroffers, and internal hire data. |
| Contextual factors | Account for location, shifts, perks, and required experience. |
| Operational impact | Ensure salary decisions align with budgets and broader business viability. |
| Strategic use | Combine quantitative trends with qualitative signals to guide hiring strategy. |
Benchmarking isn’t something that every company will bother with. Some companies look to internal forces to determine what they offer as starting salaries. This will typically coincide with a desire to keep staffing costs as low as possible in order to maximise profits.
In this scenario, employees know that their salaries are less than market value. And they know that penny pinching at the top is what keeps salaries this low. This isn’t what we would describe as an employee-centric company.
Companies that take employee happiness and engagement seriously will be much more concerned with ensuring that salaries are both competitive and sustainable. After all, there’s little sense in joining a company for a high salary if their employee spending ultimately puts them out of business.
Wondering how to get started with salary benchmarking? Try these following tips:
Track market pay continuously to anticipate shifts, refine offers, and protect retention—especially when competitors raise starting salaries or adjust experience requirements.
Use qualitative signals—like counteroffers, sector trends, and candidate expectations—alongside salary data, and balance competitiveness with sustainable operating costs.
You don’t always have to outpace the competition in terms of starting salaries – unless you need to hire the very best of the best. Salary benchmarking should help to inform your strategy, but there needs to be more insight than just numbers. Look for qualitative data alongside the quantitative.
Salary benchmarking is a great way to keep an eye on the competition and look for signs of issues in your sector. Stagnant salaries might indicate wider economic pressures that are impacting more than just your company.
If you are facing a period of stagnancy, you can look for ways to support your employees in other ways, either through improved work/life balance or additional perks.
Staying competitive in today’s market starts with attracting the right talent at the right salary. Post your vacancy with CMD Recruitment and let our experts connect you with the best candidates.
