-75%
Solution
Benchmarking is the act of comparing the performance indicators and practices of one organisation with those of other organisations that are similar. It offers a basic yet critical framework for the establishment of a reward strategy for the following reasons.
Benchmarking offers the organisation information on the market rates and trends to support a competitive reward structure (Northup, 2023. Benchmarking also provides insights on the extent to which current reward systems match the standards that are set both internally and externally. It also provides the foundation for reward decision-making to motivate, retain and attract employees of the highest quality.
Published pay surveys
Published pay surveys offers a relatively inexpensive means of comparison of a great many positions across the country. The surveys employ data from different employers so that the results obtained are big enough to capture trends (Martindale, 2017). The data is also anonymised, thereby enabling comparison without necessarily disclosing the pay information. The only disadvantage of the approach that can be identified is the fact that such large-scale surveys may not adequately capture such regional differences in the pay rate. The data sets may not fully represent the reward packages or the labour markets in which Eco-Insulate exists or operates. In turn, the benchmarks would not be completely useful in relation to the business.
Pay Club Membership
A pay club can enable face to face monthly meetings and exchange of information in offering highly customised benchmarks on reward packages with other similar sized local companies within Eco-Insulate’s actual industry and geographic labour market. This localised data collected from peer organisations should in fact provide some very rich information. However, the dependency on a set of members as benchmark partners could also be a limitation as well. As the membership base of the pay club may be limited, there are likely to be somepeer comparators that Eco-Insulate considers most relevant and yet may not be considered if they are not members of the pay club. Lack of diversified membership might limit the richness and the depth of benchmarks collected
Consultancy benchmarking review
Perhaps, hiring a specialist consultant to undertake the benchmarking would allow Eco-Insulate to use very specific comparators chosen for comparison with the reward packages against very specific comparators chosen by the consultant for Eco-Insulate (Downs, 2019). However, the added costs of a consultancy review are far worse as compared to options such as a pay survey or club membership that enable benchmarks against a cross section of organisation at a fraction of the cost.
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