Compensation Benchmarking

What is compensation benchmarking in BambooHR? 

Purpose: This guide will introduce you to the power of compensation benchmarking to ensure competitive and fair pay scales, helping you attract and retain top talent. This guide empowers you to leverage data-backed insights and Mercer benchmarks to optimize your compensation strategy effectively.

Table of Contents

Compensation benchmarking overview

What is compensation benchmarking?

Compensation benchmarking is a strategic process companies use to compare their compensation packages against those offered by other companies in the same industry or geographic area. 

This process involves:

  • Data collection: Companies gather data on salaries and other compensation elements from various sources, such as industry surveys, salary databases, and market research reports.
  • Analysis: The collected data is analyzed to determine the market rate for specific roles, considering factors like job function, level of experience, industry, and location.
  • Comparison: Companies compare their current compensation packages to the market data to see how they stack up against competitors.
  • Adjustment: Based on the analysis, companies may utilize compensation planning to adjust their compensation structures to ensure they are competitive, equitable, and aligned with their strategic goals.

Compensation benchmarking sets you and your company up for success so you can:

  • Know how much your company is paying for roles by location.
  • Know how much the market is paying.
  • Compare the data and make decisions.

This will not only save you time and money, but also give you the confidence that you have the compensation data you need to help your business thrive. BambooHR's compensation benchmarking is powered by Mercer, a leading global consulting firm specializing in talent solutions. Beyond leveraging Mercer's robust market insights, customers can also create custom benchmarks tailored to their unique organizational needs.

Compensation benchmarking in BambooHR

Compensation benchmarking is a critical tool for your company to ensure you remain competitive, fair, and aligned with market trends, ultimately supporting your ability to attract and retain the talent necessary for success. Compensation benchmarking in BambooHR:

  • Supports data-backed compensation decisions: By providing reliable benchmarks, compensation benchmarking helps ensure fair pay scales, which is critical for retaining employees.
  • Provides insights for recruitment and retention: Compensation benchmarking directly addresses pain points like the difficulty of finding accurate benchmarks and the time wasted switching between platforms.
  • Integrates trusted compensation data: We integrate Mercer data directly into BambooHR, eliminating the need for switching between different platforms.

Accessing compensation benchmarking

As a Full Admin, you can access compensation benchmarking from your BambooHR homepage. Under the My Stuff widget, select Compensation Benchmarks

The main page displays the compensation benchmarks for all company job titles by location. Every job title configured within Settings > Employee Fields > Job Titles is included in this list, even if no employee is currently assigned to that job title.

Each row in the table displays the job title, level, location, and pay rate. It also includes a visualization of employees in each job title, location pairing, pay band, and relevant benchmarks.

  1. Group By: Group the job title-location pairs by Department, Division, Job Group (from levels and bands), Job Level (from levels and bands), Location, or Manager. If levels and bands are not set up, Job Group and Job Level options will still be displayed, but selecting a Group by option related to levels and bands will show a page with a button that directs the admin to Settings > Compensation to set them up.
  2. Show: This defaults to All Employees in Filled Roles, but you can filter the table data by Location (all, United States, non-US, or remote) and Role (filled, empty, or all).
  3. Group: All job title-location pairs will have their own section based on the Group By selection. This table includes columns for: Job Title & Level (as configured in levels and bands), Location, Pay Rate (median pay for employees in that job title-location pairing).
  4. Job title: Clicking the hyperlinked job title will open the Job Title Details page. On the job title detail page, users can view a table of employees and a visualization that compares employees against added benchmarks, showing who falls within or outside the specified range.
  5. Search Mercer: Admins can click Search Mercer in the upper right corner of the page to search the Mercer Benchmarks database independently of the job titles they currently have listed in BambooHR.
  6. Upload Benchmarks: Admins can click Upload Benchmarks to import multiple custom benchmarks.

Employee job titles details

From the overview page, click on a job title hyperlink to view the Job Title Details page. This page includes the pay data and benchmarks for the job title and location, as well as a table with the list of employees included.

Pay data and benchmarks section

  1. New Custom Benchmark: Click New Custom Benchmark to open the modal to create a new custom benchmark. If a Mercer benchmark has not been added to the job title, you will instead see a New Benchmark button, allowing you to add a new custom benchmark or a Mercer benchmark.
  2. Edit or Delete Benchmark: A menu option will become visible when you hover over a benchmark. You can edit or delete the benchmark by clicking on this action menu. If you select Edit for a Mercer benchmark, the Review Benchmark modal will open, allowing you to update the chosen Mercer benchmark. For a custom benchmark, click Edit, and the Edit Custom Benchmark modal will appear. Select delete for either type of benchmark, and a confirmation modal will show.
  3. Company/Pay Band: The Company row displays all employees within that location and job title, along with their placement within the pay range. Hover over an employee to open a popover that shows their name and compensation details. If the company has added the job title to a pay band (set up Levels and Bands with Settings > Compensation), the min, mid, and max points will be displayed for that pay band. If the job title has not been added to a pay band, a tooltip will direct you to add the job title to a pay band.

The table below the Pay Data & Benchmarks section displays all applicable employees, with the following columns:

  • Name: Employee name
  • Location: Employee location
  • Annualized Pay Rate: The total pay an employee earns in a year based on their current pay rate.
  • Compa Rati: Compa Ratio = (actual salary/pay band salary range midpoint) × 100%. For example, if an employee earns $60,000 and the midpoint of the salary range for their position is $70,000, their compa ratio would be: Compa Ratio = ($60,000 / $70,000) = 0.857. This means the employee earns 85.7% of the market midpoint for their position.
  • Range Penetration: Range penetration is a percentage that shows how far an employee's salary is within a pay band range. For example, with a salary of $46,000 in a pay range of $37,000 to $57,000, the range penetration is 45%, meaning the salary is 45% of the way from the minimum to the maximum of the range.
  • YOE: Years of experience (in role)
  • Pay Band: This column displays a meter that shows the pay band's min, mid, and max, along with the employee's position within that range. If the employee's pay falls outside the range, the meter will be highlighted in orange. Hovering over the meter will reveal a popover displaying the employee's pay and indicating whether they are above or below the market rate (if applicable).

Clicking Export in the top right will export the table contents to a CSV file.

In BambooHR, benchmarks are powered by Mercer, a leading data provider. Customers can use the Mercer data set to find equivalent job titles that match their own.

Searching in BambooHR (using Mercer)

To find a match for a particular job title, select the job title from the overview page and then choose New Benchmark > New Mercer Benchmark. It's important to note that each Mercer benchmark will need to be added to each job title manually.

To independently explore the data without associating it with a specific job title click on Search Mercer from the overview page. This feature is especially beneficial for customers considering establishing a new position within their organization.

When you click Search Mercer from the overview page, the Search for Job Pay Data modal opens. Enter the Job Title and filter the results by Location. Once you've initiated a search, the search results table will populate with Mercer job pay data.

The Locations drop-down includes locations in the United States, the only currently available data with a Mercer search. You can search for a specific location using the search bar at the top of the location drop-down.

The dropdown consists of sections for:

  • Countries: (United States)
  • Regions: (North Central, Northeast, South Central, Southeast, West Coast, including their states)
  • States: (all U.S. states)
  • Cities: (about 400 larger cities all across the U.S.)

From the Search Results table, click on View Job Description to view the Mercer job description. This information is essential in evaluating whether the Mercer job title aligns well with your company's job title.

Adding a Mercer benchmark to a job title

When viewing the Job Details page, click New Benchmark > New Mercer Benchmark and it will open a modal to perform a job search and add a benchmark to the selected job title. The top of the page will include details such as the job title, location, number of employees, and company median pay.

Under Job Search, the job title will automatically populate into the search field and display search results for the United States. A filter can be applied by location. Once a Job Title is selected from the results, click Save Benchmark and it will add the Mercer benchmark to the job title.

After selecting the Mercer benchmark, you can access the Review Benchmark option from the action menu on the Job Details page. This option appears when hovering over the existing Mercer benchmark. Click Edit a modal will open where you can view the currently matched job and perform a new job search if needed.