Pay benchmarking helps you set fair, competitive salaries. It can help you to attract talent, prevent costly turnover, and build trust inside your team.
Done badly, or not at all, it can lead to guesswork, pay gaps, and discontent.
The challenge is that benchmarking tools can be expensive and overwhelming, especially for growing companies that lack big HR budgets.
In this article, we’ll explore the best practical options for pay benchmarking, including salary databases, HR platforms, and industry-specific resources.
Fair pay isn’t just about compliance or keeping up with the market. It’s about culture.
When employees suspect they’re underpaid compared to peers, this negatively impacts trust, engagement, and retention.
The costs of turnover are significant. Research from SHRM estimates that replacing an employee costs, on average, the equivalent of six to nine months of their salary.
Pay benchmarking is a way to avoid these costs while staying competitive against larger firms. It protects your runway, helps you retain key people, and signals fairness inside the business.
A smart benchmarking approach balances cost, accuracy, and context.
Salary databases are often the first stop for startups because they’re quick, easy, and cheap to access. Platforms like Payscale, Glassdoor, and Levels.fyi are widely used because they let you see what people in similar roles are earning, often broken down by geography, company size, or level of experience.
They’re great for early-stage companies who just need to check whether their offers are broadly competitive.
For example, if you’re about to hire your first engineer, Levels.fyi can show you how compensation is structured at tech companies.
Glassdoor provides rough averages across industries, while Payscale lets you filter by location and years of experience.
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These tools are best for early-stage startups or SMEs who need a baseline view of salaries before making offers.
As a company grows, simple salary databases may no longer cut it. That’s where specialist HR platforms with benchmarking features come in.
Tools like Pave and Figures are designed for startups and scaleups that want to benchmark pay more rigorously.
These platforms offer fresher, more structured data than free databases because they often collect verified information from participating companies.
Many also integrate with HRIS and payroll systems, so you can benchmark against the market in real time rather than relying on one-off searches.
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These tools are best for growing startups or scaleups that need to professionalise pay benchmarking.
Sometimes the most useful benchmarking data doesn’t come from software at all. Industry-specific surveys and peer networks can provide context and nuance that global platforms miss.
Professional associations like the CIPD run annual reward and pay surveys, while specialist bodies such as the PRCA or BCS publish reports tailored to their industries.
Peer networks, whether Slack groups, founder communities, or local HR roundtables, can also offer anecdotal but highly relevant insights into what similar companies are paying.
The strength of this approach is context. If you’re in a niche industry, a peer network can help you understand real-world challenges like how startups in your sector are structuring pay for hard-to-fill roles.
The trade-off is that surveys can be expensive or infrequent, and peer data isn’t always verified. But when combined with other tools, these insights can help you make smarter decisions.
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These approaches are best for SMEs in niche industries where context matters more than broad averages.
The best approach depends on your stage, size, and hiring needs. Think of it as a progression:
In short, start lean with accessible tools, add structure and depth as you scale, and layer in industry-specific insights when context becomes critical.
Pay benchmarking doesn’t have to drain your budget. The key is to find the best tool for each stage of your growth.
Start with what you can afford, layer in more robust tools as you grow, and always focus on fairness and transparency.
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