Compensation Benchmarking Study

Service description

A compensation benchmarking study compares what a business pays for each role against market pay data for similar jobs, and checks whether pay inside the company is consistent across comparable employees. The provider delivers pay ranges, flags gaps and recommends adjustments. Some states, including California and New York, require pay ranges in job postings, which makes defensible ranges more valuable.

Common industries

Applies to any employer, especially growing companies hiring across states.

ROI

Defensible, market-aligned pay helps you attract and keep people and reduces pay-equity legal risk.

Benefit

Benchmark your pay against market data and check for internal equity — increasingly required by pay-transparency laws.

Why get it

Pay set without market data tends to drift, which costs offers and people. Pay-transparency and equal-pay laws also give employers a legal reason to be able to explain their pay.

When you benefit

Usually repeated every year or two, and again when the business enters a new market or changes job levels.

What it costs

Flat fee per study.

When you pay

Providers typically quote a flat fee scaled to the number of roles and employees reviewed, with a separate price for a pay-equity analysis. Payment is commonly split between a deposit at the start and the balance on delivery of the report.

Other costs

Access to salary survey data if the provider doesn't include it, and internal time to assemble payroll and job-description data.

Risks to know

Pay differences that job-related factors don't explain can support claims under the Equal Pay Act (29 U.S.C. §206(d)) and Title VII, and some states add their own equal-pay and posting rules. Poor market data, or comparing against the wrong peers, can produce ranges that look defensible but aren't.

When risks arise

Legal exposure builds quietly as pay decisions accumulate, and surfaces when an employee complains, a posting rule applies, or an agency investigates. A study done before then lets the business fix gaps on its own timeline.

The process

The provider collects pay and job data and matches each role to market surveys. It analyzes market position and internal consistency, then drafts a report with ranges and recommended adjustments. The business reviews the findings and the provider walks through how to apply them.

Your commitment

The business provides current pay data by employee, job descriptions and levels, and work locations, and decides which market it competes in for talent. It should flag any pay decisions already planned and be ready to act on the gaps the study finds.

Documents to gather

• Payroll register with job title, level and work location
• Job descriptions and the job levels in use
• Offer letters or pay history for recent hires
• Any existing salary bands or pay ranges

Helpful reading

• Why Your Organization Should Use Salary Benchmarking — Harvard Business Review
• Navigating Pay Transparency and Equity Laws — Society for Human Resource Management
• Equal Pay Act — Legal Information Institute, Cornell Law School (Wex)

Further research

• 29 U.S. Code § 206 — Minimum wage (subsection (d): prohibition of sex discrimination in pay, Equal Pay Act)
• 42 U.S. Code § 2000e-2 — Unlawful employment practices (Title VII)
• EEOC — Facts About Equal Pay and Compensation Discrimination
• California Labor Code § 432.3 — Pay scale disclosure and pay history
• California Labor Code § 1197.5 — Equal pay
• New York Labor Law § 194-B — Mandatory disclosure of compensation or range of compensation