How to Select Jobs for Compensation Benchmarks

July 4, 2019

This is the first excerpt from our white paper, How to Perform Compensation Benchmarking and Set Salary Ranges. Create the best compensation benchmarks for your organization. Download the full whitepaper here.

After setting up your competitive set based upon your compensation strategy, identify the positions within your organization you wish to benchmark against. When selecting your compensation benchmarks for jobs, you can start with those positions that are standard across different industries, such as HR generalist, accountant and administrative assistant. Next, choose industry-specific positions that are standard at your company compared to positions in other organizations within your industry, such as civil engineer, registered nurse and welder.

Hybrid Jobs: How to Price These Roles

Every organization will have some jobs that are unique. To address highly specific business needs which cannot be met by the typical roles in the market, organizations often create new roles where disparate or unusual skills are combined in a single role. These are known as hybrid jobs. Here at PayScale, we’ve seen examples where companies blend Program Manager with SEO Manager, Taxonomist with Administrative Assistant and HR Director with Director of IT.

For these roles, you may not find a good match in your survey data. Averaging the market value of two roles isn’t always the right answer either. The right approach for you depends on the role in question, your business needs, your talent market and your organization’s pay philosophy. That said, there are four distinct approaches we’ve seen organizations take regarding compensation benchmarks. To illustrate these methods, we’ll use HR Manager/Officer Coordinator as the example.

The Blending Method: This method begins by benchmarking each job separately and then blending the market data to create a composite. If the position has clear delineation of duties performed, you can apply the appropriate weight before blending: HR Manager 40 percent, Office Coordinator 60 percent. The blending method works best for companies who value a fair balance between market competitiveness and internal equity. However, if one or more of the jobs you are blending is not common in the market and the market data doesn’t instill confidence, this isn’t the best approach for you.

Highest Level Role Method: Sometimes it helps to imagine you are posting this job for external candidates. Are you looking for an Office Coordinator with HR Manager experience or the other way around? It is common for the higher-level position to drive the pay in the market for the talent you are seeking. If this applies to you, it makes sense to match this role to the higher level of responsibility when choosing a title. In this case, selecting the HR Manager title would be the best approach. This approach works well for organizations which want to pay competitively to the market.

Internal Equity Method: If your hybrid role is so unique you just can’t nail down a match or blend of market data that instills confidence, you may choose to align these roles to your internal structure. In other words, find the best internal comparable role to determine the market rate for this role. This method aligns well for those organizations which value internal equity. But this can also be a good resolution if you are struggling to nail down market competitiveness.

Premiums & Discounts: If you have a strong pulse on the market and you understand the value of certain skills, applying a premium can accomodate for any skills that might not be typical to the position the hybrid role was assigned to. Or perhaps, the job that your hybrid position best aligns to needs an adjustment in the other direction based on internal leveling. For instance, you might match a Manager level to a Director level and apply a 10 to 15 percent discount to bring that role in line.

No matter what approach you take to create compensation benchmarks, having the right tools and an understanding of the different methods you can apply will get you to a more reliable range. Compensation management platforms like PayScale Insight Lab can make this process easier and help you find the right balance or blend of data.