Benchmarking Your Salary

At some point in your career, you will almost certainly be in a position where you need to benchmark your salary. The process of benchmarking takes some time and effort on your part, but it is well worth your time to ensure that your salary is comparable and appropriate for your position and profession.

What is a salary benchmark?

Put simply, a salary benchmark is how you compare your salary (or potential salary) to comparable positions across the same or different industries. There is more to it than just a dollar amount, though, as there may be wide variations in salary due to location, cost of living, experience, and other such influencing factors. A salary benchmark is not an absolute figure stating what you should be earning, but rather an educated gathering of information to determine where your salary falls in comparison to other similar positions

Why benchmark your salary?

Periodic benchmarking of your salary is a great way to ensure your compensation tracks with general compensation trends in your profession and/or position. It can be used as a component to assess your career status and set future goals, or it can be used for the purpose of negotiating a salary change.

If you benchmark your salary and find your current salary is not in line with the benchmark then you may be in a good position to go to your employer to ask for a salary revision. The timing of such a request is often important, with your chances of success increased if the topic is discussed during a positive performance review or during a time of budget development.

Another reason to benchmark a salary is if you are searching for a new job and you want to ascertain if the salary range for an open position is reasonable. Benchmark information will also help you during salary negotiations if you are offered a new position, as you will be prepared with solid reasons to back up your salary request.

Where do you find benchmark information?

Benchmark salary information can be found in a number of places, both online and in published form. Professional associations, industry and trade associations, Chambers of Commerce, and economic development agencies are generally good sources of salary benchmark statistics. Pay attention to whether the study you obtain is national, regional or local in scope, as that will have an impact on how you compare your salary to what is in the study.

Other considerations

In addition to considering location, industry and regional factors, there are two other considerations to keep in mind when benchmarking your salary.

Public vs. private - There can be significant differences between salaries paid by private entities in comparison to public entities such as governments, utilities, etc. You can expect public entity salaries to be somewhat lower than private entity salaries, but be careful to consider other aspects of compensation, too. Public entities often provide more robust benefit packages than private entities, which may offset differences in salary

Supply vs. demand - Some professions are more in demand than others, leading to corresponding differences in benchmark salaries. Pay attention also to projected demand for the future, as this can be a good indicator of future trends in salary levels.

Click here to go to the next salary article - Negotiating Salary When Changing Careers