Posted by Mark Macoun on 08 November 2024
The future of Pay benchmarking – is real-time data worth using?
Paying workers at a level that is seen to be fair and competitive is vital for any company or organisation wanting to succeed. It is a key cornerstone to attracting and retaining strong talent.
In the current market we are seeing companies in sectors with a heavy reliance on technology being thrust into more defensive positions by the rapid evolution in value of certain key roles. Where before these companies held the trump cards, now some positions are becoming more in-demand and premium, which is creating a genuine talent marketplace and increasing the chance of flight risk.
Is your data keeping pace?
Clearly, organisations want to put themselves in the best possible hiring position, and that includes questioning the pace of cycle that data houses are running on. Are annual submissions and the current pace and frequency of analysis still fast and regular enough to make you agile?
Anecdotally, we are hearing companies say that the data offering may now be lagging behind and – as a result - the market for roles like software developers, cybersecurity and engineers has shifted in comparison to their trusted data source.
But how reliable is real-time data, and it is something we should be adopting?
Real time data – the benefits
- Competitive advantage – being able to access real-time benchmarking data allows organisations to keep abreast of the current situation, and stay ahead of competitors by understanding where they stand in relation to industry standards and best practices.
- Agile and adaptable - With real-time benchmarking data, organisations can adapt their strategies based on shifts in the market, enhancing responsiveness and enabling them to keep pace with the market.
Real time data – the challenges
- Data Accuracy - Real-time benchmarking data can suffer from inaccuracy or inconsistency due to variations in data sources, data collection methods or errors in measurement. Typically, the data does not 100% accurately reflect the salary somebody is hired at, only the advertised range.
- Data comparison – comparing the level or scope of roles can be difficult because most data stems from job adverts and titles, which can differ in methodology and labelling across industries and sectors.
- Risk of overreaction – without the right level of experience, or where not enough care and attention is taken, it’s possible to make hasty knee-jerk reactions to ‘live’ fluctuations in benchmarking data, or to make compromised decisions that don’t consider longer term implications or underlying causes.
Mitigation – factors to consider
Consider the following factors before deciding whether to go with real-time data:
- Industry competitiveness - If your industry is highly competitive and rapidly evolving, real-time benchmarking data can provide valuable insights into market trends. In a less dynamic or rapidly-changing industry, it may be of less value.
- Data quality and reliability - Assess the quality and reliability of the real-time benchmarking data sources available to you. Ensure that the data is accurate, relevant, and up-to-date enough to derive meaningful insights and make informed decisions.
- Business priorities – Consider carefully whether the need for this data aligns with your business objectives. If improving performance, staying ahead of competitors, or being more agile in your decision-making are key priorities, then real-time benchmarking data may be worthwhile.
Real-time benchmarking data is not a panacea to everyone’s problems. In many cases, data houses still boast the robustness and credibility you need to stand by the majority of pay decisions. Real-time data can offer benefits in speed, agility and competitiveness but a trade-off in accuracy means it should probably be used conservatively and for hard-to-fill, premium roles.
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