Benchmarking as a tool for determining pay

CURRENT approaches to remuneration management mainly rest on "benchmarking" as a technique. Benchmarking in this context means matching what is done in the organisation to the practices of the market. The key assumptions of a benchmarking approach to remuneration are that there is an efficient market for people, and that the data used to determine the level of remuneration are robust and reliable.

The efficiency of the market

An efficient market in the context of benchmarking is one where there is:

The market place for junior staff has many of the characteristics of an efficient market. There are many vacancies and job seekers; the motives for recruitment of, for example, a relationship manager are broadly congruent, regardless of the re…