Market Benchmarking

Market benchmarking is the process of comparing your company's pay levels to what other companies pay for similar roles. It uses compensation surveys from providers like Mercer, Radford, WTW, Carta, or Payscale.

Results are expressed as percentiles. P50 is median. P75 means paying more than 75% of the market. Companies decide their target percentile based on their compensation philosophy.

Benchmarking should cover all components: base, bonus, equity, and benefits. A company might be competitive on base but behind on equity. Each component tells a different story.

Good benchmarking happens at least annually. In fast-moving markets, companies refresh benchmarks twice a year because rates can shift 10-20% in a single year.