Salary Benchmarking Data Sources: How to Choose the Best Vendor

Salary benchmarking is the process of comparing your organization’s compensation packages against industry standards to ensure competitiveness, fairness, and equity in pay. For businesses in tech-driven and high-growth industries salary benchmarking is crucial to attract top talent and retain your workforce. Without access to reliable and comprehensive data, you risk underpaying (leading to high turnover) or overpaying (hurting your bottom line).

But choosing the right salary benchmarking vendor can be overwhelming, especially if you’ve never done it before. This guide explains everything you need to know, from understanding what salary benchmarking involves to comparing top vendors and making the best choice for your business.

A salary benchmarking data source is a platform or service that provides insights into compensation trends, salary ranges, and benefits across industries, roles, and geographies. These sources use data collected from employers, surveys, and job postings to create a reliable foundation for comparing salaries and compensation structures.

• Attract Top Talent: Competitive salaries make your job offers attractive to the best candidates.
• Retain Employees: Employees who feel underpaid are more likely to leave.
• Ensure Fairness: Aligning pay with market standards fosters trust and fairness.
• Comply with Regulations: Some regions require proof that pay practices are non-discriminatory.
• Optimize Budgets: Accurate benchmarks help allocate compensation budgets wisely.

Understanding what data you’ll need is critical when selecting a vendor. Here are the most common types of data included in salary benchmarking:

1. Base Salaries: Foundational pay for specific roles.
2. Incentives: Bonuses, commissions, and other performance-based pay.
3. Equity and Long-Term Incentives: Stock options or other investments for key roles.
4. Benefits: Health insurance, retirement contributions, and paid time off.
5. Cost-of-Living Adjustments: Location-specific pay adjustments.
6. Pay Ranges: Minimum and maximum pay bands for each role.

If you’ve never shopped for salary benchmarking tools before, start by considering these factors:

• How is the data collected? (e.g., surveys, employer reporting, crowdsourcing)
• Is the data verified for accuracy?
• How recent is the data? Outdated data can lead to poor decisions.

• Does the vendor cover your industry? For example, tech startups often need niche data on software engineering and product management roles.
• Are executive and specialized roles included?

• Does the data include your target regions or countries? This is especially important for global companies or remote teams.

• Is the platform intuitive for HR teams with limited technical expertise?
• Are there tools for analyzing or visualizing the data?

• Can the vendor create custom reports or tailor insights to your organization’s structure and needs?

• Does the vendor offer consulting services to help interpret the data?
• Are there training resources or customer support?

• What’s the cost, and what’s included in the pricing plan? Is there flexibility for smaller businesses?

Top Salary Benchmarking Data Providers

To help you get started, here’s a detailed comparison of the most popular salary benchmarking data providers:

Salary Benchmarking Data

1. Define Your Goals
   • Are you benchmarking specific roles or entire teams?
   • Do you need executive compensation data, geographic adjustments, or equity management tools?
2. Evaluate the Vendor’s Coverage
   • Check if the vendor adequately covers your industry and company size. For instance, Radford is ideal for tech companies, while Pearl Meyer excels at executive compensation in healthcare.
3. Request a Demo
   • Ask for a demo to understand the user experience, available tools, and customization options.
4. Assess Pricing
   • Understand what’s included. Some vendors offer flat fees, while others charge based on company size or features.
5. Ask Questions
   • How frequently is the data updated?
   • What format is the data provided in (e.g., Excel, PDF, portal)?
   • Does the vendor offer consulting or interpretation services?
   • Can the platform integrate with your existing HR systems?

Selecting a salary benchmarking vendor can be challenging. Here’s how to avoid common mistakes:

• Pitfall: Buying data unrelated to your industry or roles.
• Solution: Verify the vendor’s industry expertise and request sample reports. Ensure they cover niche roles and regions specific to your needs.

• Pitfall: Misinterpreting or misapplying benchmarking data.
• Solution: Ask vendors about data collection and verification methods. Opt for providers that offer consulting or training to help interpret the data effectively.

• Pitfall: Purchasing excessive datasets you can’t leverage.
• Solution: Start small with focused data relevant to your immediate goals. Expand as needed instead of investing in overly comprehensive datasets upfront.

• Pitfall: Choosing a vendor that can’t grow with your organization.
• Solution: Select scalable solutions like Mercer or Pave, which can accommodate future needs as your company expands.

• Pitfall: Using generic data that doesn’t reflect your unique structure.
• Solution: Look for vendors offering tailored reports and flexible filtering options for company size, location, or industry.

• Pitfall: Failing to apply benchmarking data properly.
• Solution: Assign a dedicated HR team member to manage data, integrate it into existing systems, and review it regularly to keep benchmarks relevant.

• Pitfall: Expecting data to solve all compensation challenges.
• Solution: Use benchmarking as part of a broader strategy, incorporating internal equity, benefits, and career development opportunities.

Key Takeaway

Define your goals, select relevant and scalable data, and ensure it’s applied strategically. By avoiding these pitfalls, your organization can maximize the value of salary benchmarking and create competitive, fair pay structures.

When evaluating salary benchmarking vendors, pricing structures can vary widely. Here’s an overview of the two most common pricing models and what you can expect:

Flat fees are typically charged for access to a specific survey or dataset. The cost depends on the depth and scope of the survey, as well as the size of the organization.

• What’s Included:
  Access to a specific compensation survey or report, usually covering a particular industry, region, or role type. Some flat-fee plans may include limited consulting or customization options.
• Typical Cost Range:
  • Small-Scale Surveys: $2,000–$10,000 per survey
  • Comprehensive Industry Reports: $10,000–$50,000+ per report
  • Global Multi-Sector Access: $50,000+ annually, including add-ons like tailored insights or consultation.
• Best For:
  • Companies looking for a one-time benchmarking solution.
  • Businesses with a clearly defined need (e.g., benchmarking executive salaries in healthcare).

PEPM subscription models charge a monthly fee based on the number of employees in your organization. These plans are scalable and often include ongoing updates and additional features, such as integration with HR software.

• What’s Included:
  • Continuous access to the vendor’s entire database or platform.
  • Real-time updates and dynamic data (e.g., crowdsourced salary trends).
  • Additional features like salary structure management, equity tracking, or benchmarking tools.
• Typical Cost Range:
  • Basic Plans: $4–$10 PEPM (e.g., small businesses managing compensation for 50–100 employees).
  • Mid-Tier Plans: $8–$15 PEPM (e.g., companies with 500–1,000 employees requiring custom data insights).
  • Enterprise Plans: $12–$25 PEPM (e.g., global organizations needing multi-region data and consulting).
• Best For:
  • Businesses with ongoing benchmarking needs, such as scaling companies or those in fast-moving industries.
  • Organizations looking for integrated solutions to manage compensation structures alongside benchmarking.

1. Consider the Frequency of Use:
   • If you need data for a one-time project (e.g., market salary review), a flat fee survey might be more cost-effective.
   • For continuous access or frequent benchmarking, PEPM subscriptions when available provide better long-term value.
   • Note that you may not have a choice between these two options, depending on the survey provider. It’s important to understand the pro’s and con’s of each type of data source.
2. Assess Organizational Size and Scope:
   • Flat fees often work well for smaller businesses with limited needs.
   • Larger companies benefit from the scalability of PEPM models, particularly when managing compensation for hundreds or thousands of employees.
3. Evaluate Included Datasets:
   • Flat fees generally offer access to static datasets, while PEPM models often include real-time or periodic data updates and advanced data tools.