The changing face of benchmarking

Organizations are digging deeper and taking more into account to assess if they measure up
By Michael Ng and Liz Wright
|Canadian HR Reporter|Last Updated: 10/17/2006

Organizations are becoming much more sophisticated in how they tackle the art and science of benchmarking what they offer employees.

As the labour pool tightens, and competition for employees heats up, the traditional approach to benchmarking is giving way to a more sophisticated method. Whereas organizations used to focus primarily on compensation, examining whether internal pay levels were competitive in the market, they are now casting a wider net and taking into account the “total reward” offering including things like pensions and benefits.

Such analysis includes the more traditional assessment of how base pay, total cash compensation (base pay plus bonus) and total direct compensation (base pay plus bonus plus long-term incentives) are positioned against the market for an array of benchmarked jobs. But now it also includes analysis of how benefit and retirement plans compare against market comparators — including comparisons of employer-paid and employee-paid benefits. The addition of this analysis enables organizations to bundle external market analysis to determine how they stack up not just in terms of total compensation, but in terms of total rewards as well.