Many companies have relied on the latest salary survey data to benchmark their internal salaries against market related salaries.

Salary benchmarking is essential for external parity where companies compare their salaries and benefits against those offered by their competitors or peer groups to ensure they attract and retain the best talent. It is especially important when it is time to consider annual increases to see if their offerings are in line with salaries and benefits of their peer groups, or if they are already on par.

The effect of the Covid-19 disease on the workplace and the way companies operate brings with it new challenges. In a very short time span the workplace has fundamentally changed. Many people are prevented from working, some are working short time and others have been laid off permanently. The “market” is changing constantly.

In South Africa only a few companies are known for housing survey data. These companies have been offering salary benchmarking, job matching assistance, internal and external equity measures and databases. The information can be acquired from the companies but can be quite expensive given the extent of data that must be collected, validated and analysed. Traditionally a company would subscribe to the service and provide their payroll data. They would participate in an extensive survey and would be provided with the relevant salary survey dataset.  This enables the company to do analysis and comparison ratios to understand how each role’s salary and benefits in the company compare with the market.

However, given the major impact of Covid 19 on businesses and the future of work the question arises how relevant the existing salary survey data is.  The structure and composition of companies post-Covid 19 will certainly change, and some already have. “It is also possible that many companies and many direct competitors against whom you have been benchmarking your salaries are no longer in existence.” This will have a knock-on effect well into next year.

The question is whether it still makes sense to use the traditional method of benchmarking salaries. Should we be investigating alternatives if the data might not be so relevant, or if companies do not have the funds to subscribe to such a service?

Affordability will always be the first factor when looking at the salary bill and possible changes or increases.  The Consumer Price Index (CPI) is generally a good indicator of what is happening in the market. Many companies have followed this route in the past, regardless of market salary data.  A combination of affordability and CPI will most likely be the best alternative should you choose not to or cannot afford market data.  Another alternative could also be to run a customised / bespoke survey.  This way you can be certain that you have the full picture of what is happening currently and you are able to selectively elicit the specific information you need from the right group of companies you would like to compare yourself to.

No one fully understand the way in which the workplace is being transformed, not only because of the pandemic, but also the onset of the Fourth Industrial Revolution and Artificial Intelligence added to the mix. The challenging times we are in will certainly force the remuneration fraternity to think outside the box and dream up new and innovative ideas to deal with our longstanding methods and practices.



Janine O’Riley
Psychometrist & Reward Specialist