I recently undertook a salary benchmarking exercise for a client. It gave us something valuable: a clearer picture of what other organisations were paying for apparently similar roles.
It also reminded me how much sits behind the figures.
Salary benchmarking can look reassuringly scientific. Find comparable jobs. Record the salaries. Calculate the range, quartiles, median and average. Then see where your organisation’s salaries sit.
The spreadsheet looks impressive. The numbers are precise. And it feels as though you have an objective answer.
But do you have the full story?
As I worked through the exercise, the challenge was not calculating the median. It was deciding which roles genuinely belonged in the comparison and understanding the differences between them. Similar titles did not always mean similar responsibilities, authority or organisational risk.
That does not make benchmarking pointless. The comparison is useful. It can challenge assumptions and show where a salary warrants a closer look. But the median tells you the midpoint of the salaries you selected. It does not, on its own, tell you what your job is worth.
Whether that midpoint is useful depends on what went into the dataset in the first place. And that is where salary benchmarking becomes considerably more complicated than it appears.
A job title is not a job
Suppose an organisation wants to benchmark its Head of Operations. You search the market and find 25 Head of Operations vacancies. Excellent. Except one manages 80 employees across multiple locations. Another manages six. One owns a £10 million operational budget. Another has very limited budget responsibility. One reports directly to the Board. Another reports to an Operations Director, who reports to a COO, who reports to the CEO. One has responsibility for regulated services, safeguarding and organisational risk. Another predominantly coordinates internal processes.
They all have the same job title. They are not the same job. Calculating a median salary across them doesn't make them comparable. It simply produces an accurate calculation from potentially weak evidence.
Start with the role, not the salary
Before I benchmark a salary, I want to understand the job. Not merely its title.
I would look at things such as:
· Accountability - What is this person ultimately responsible for?
· Decision-making authority - What can they actually decide without escalating?
· Scope - How much of the organisation sits within their remit?
· People responsibility - Do they manage individuals, managers or entire functions?
· Financial responsibility - What budgets, income or expenditure do they control or influence?
· Risk - What could go seriously wrong within their area of accountability?
· Complexity - How difficult is the operating environment?
· Strategic contribution - Do they implement strategy or help determine it?
· Professional or specialist expertise - What knowledge does the role genuinely require?
· Organisational scale - What size and type of organisation are they operating within?
Only once those things are reasonably clear does searching for comparator roles become particularly useful. Otherwise we risk benchmarking the title rather than the job.
The job description may not tell you the truth either
There is another complication. Sometimes the job description describes the role the organisation thinks it has. The employee may actually be doing something quite different. A role originally recruited as an operational manager may gradually acquire:
· strategy;
· business development;
· regulatory responsibility;
· people leadership;
· organisational risk;
· Board reporting;
· cross-organisational decision-making.
The opposite happens too. A role carrying an impressive senior title may have a job description containing strategic language but, in practice, have relatively limited decision-making authority or accountability.
That creates an important distinction: What does the job description say? Versus What does the organisation actually require this role to do?
A credible role and reward review needs to understand both.
Bigger job titles don't automatically mean bigger jobs
There can be an assumption that: Coordinator → Manager → Head of → Director → Chief Officer represents a neat progression in organisational responsibility.
It often doesn't. A Head of Service in one organisation may carry substantially greater accountability than a Director in another. A COO in a small organisation may be doing work broadly equivalent to an Operations Manager elsewhere.
Equally, somebody with a relatively modest title may carry significant organisational responsibility. This matters particularly in smaller organisations, where job titles can evolve informally.
Someone takes on more responsibility. Their title changes to recognise their contribution. A few years later, the organisation benchmarks the new title against the external market.
And suddenly the logic becomes: The market median for a Director is £70,000.
Perhaps. But the question should still be: Is this actually a Director-level role?
Salary benchmarking should never become a mechanism for validating a title that has never itself been properly evaluated.
Organisational size matters, but not as much as people sometimes think
Turnover, employee numbers and organisational scale are relevant. A Chief Executive running a £100 million organisation is unlikely to have the same role as somebody running a £1 million organisation. But scale alone can also mislead. A relatively small organisation might operate:
· high-risk services;
· multiple regulated activities;
· complex property arrangements;
· significant safeguarding responsibilities;
· several contracts;
· a dispersed workforce;
· a complicated stakeholder environment.
Another organisation with considerably greater turnover may have a simpler operating model. So I would not use turnover as a crude multiplier: Organisation A is twice as big, therefore its CEO should earn twice as much. The relationship between scale, complexity and accountability is rarely that tidy.
Market pay and job value are different questions
This is where I think salary discussions often become confused. There are actually several different questions:
· What are comparable organisations currently paying? That is a market question.
· How substantial is this role compared with other roles? That is a job evaluation question.
· What can this organisation afford? That is a financial question.
· What does the organisation need to pay to attract or retain suitable capability? That is a recruitment and retention question.
· Is the organisation paying people fairly relative to each other? That is an internal equity question.
They overlap. But they are not interchangeable. A market median answers principally the first one. It cannot answer all five.
We're below the median isn't automatically a problem
Imagine a role is paid £48,000. The external benchmark produces:
· Lower quartile: £50,000
· Median: £56,000
· Upper quartile: £64,000
The immediate reaction may be: We're underpaying by £8,000.
Perhaps. But first I would ask:
· Does our role carry comparable accountability to the median roles?
· Is our organisation comparable?
· Are the benchmark jobs genuinely similar?
· Does the current role have the same decision-making authority?
· What benefits accompany the comparator salaries?
· What geographical markets are represented?
· Were the salaries advertised, actual or inferred?
· Are we comparing full-time equivalents consistently?
· How recent is the evidence?
· Are there factors that legitimately place this role below or above the market midpoint?
Being below the median is evidence worth examining. It is not, by itself, evidence of underpayment.
And being above the median doesn't automatically mean someone is overpaid
The reverse is equally important. Suppose somebody earns £70,000 against a market median of £56,000. It would be easy to conclude that the organisation is paying too much. Again: perhaps.
But perhaps the role is substantially broader. Perhaps it combines two functions normally separated elsewhere. Perhaps the organisation operates in a particularly difficult recruitment market. Perhaps the person carries unusual regulatory accountability. Perhaps organisational complexity justifies a premium. Or perhaps the organisation genuinely is paying materially above market for a role that does not warrant it.
The benchmark identifies the question.
Analysis determines the answer. Comparator selection is where much of the judgement sits
This is the least glamorous part of salary benchmarking and probably the most important. I'd rather have 12 genuinely comparable roles than 50 superficially similar ones. Every comparator should survive some basic scrutiny.
· Is the sector reasonably relevant?
· Is the organisation comparable in scale or complexity?
· Is the role's functional scope similar?
· Does the level of accountability resemble ours?
· Does the reporting relationship make sense?
· Does it manage similar capability?
· Is the geographical context relevant?
· Is the salary information reliable?
Not every comparator needs to match perfectly. It rarely will. But the limitations should be understood. A large dataset cannot compensate for poor comparator selection.
Beware false precision
Salary analysis naturally produces precise numbers. £51,842. £57,125. £63,447. That can imply a level of certainty that the underlying evidence simply doesn't support.
If the market evidence suggests an appropriate range of roughly £52,000–£60,000, pretending the job has somehow been scientifically valued at exactly £56,372 is not particularly helpful.
Remuneration decisions involve judgement. The objective of evidence is not to eliminate judgement.
It is to make judgement better informed and more defensible.
In the charity sector, that principle aligns with Charity Commission guidance: trustees are expected to act in their charity's best interests, make informed decisions and manage resources responsibly. For charities, decisions about senior remuneration therefore need to be capable of being justified as proper use of charitable resources.
Internal equity matters too
External market evidence is only one side of remuneration. Imagine a benchmarking exercise concludes that a particular manager should receive a substantial salary increase.
· What happens to the manager immediately above them?
· What about somebody carrying comparable accountability elsewhere?
· Could the change compress the difference between management levels?
· Does the organisation understand why two roles are paid differently?
· Can it explain those differences consistently?
A series of individually reasonable salary decisions can collectively produce an incoherent pay structure. That is why benchmarking individual jobs periodically needs to lead to a wider question:
Does our overall reward structure make sense? Benchmark the role, not the person
This distinction is particularly important when reviewing an existing employee's salary. A role evaluation should ask: What is the role worth? It should not become: How much do we think this particular person deserves?
Individual performance, experience or retention may legitimately influence where somebody sits within an agreed salary range. But those considerations should come after the role itself has been understood.
Otherwise organisations risk adjusting the value of a job according to how much they like, value or fear losing the current postholder. That makes consistent decision-making extremely difficult.
Sometimes benchmarking reveals a role-design problem
This is where salary benchmarking becomes particularly useful. Sometimes you start with: Are we paying this role correctly? and discover that the better question is: Have we designed this role correctly?
Perhaps the responsibilities are too broad. Two jobs may overlap. Strategic and operational accountabilities could be muddled. The title may overstate the authority. The role may carry accountability that should sit elsewhere. Perhaps a manager is effectively operating as a director or a supposed executive role is actually predominantly operational.
In those circumstances, simply changing the salary would treat the symptom rather than the problem. The organisation needs to understand the role first.
So what should a proper review look like?
I would think about it as a sequence:
1. Understand the organisation- Purpose, scale, complexity, structure and operating environment.
2. Understand the role - Accountability, scope, decisions, people, resources, risk and expected outcomes.
3. Test the role design - Does the role make organisational sense?
4. Select credible comparators - Not simply matching titles.
5. Analyse market evidence - Range, quartiles, median, average and relevant contextual factors.
6. Consider internal relationships - Where does the role sit relative to others?
7. Apply judgement - What does all of that evidence reasonably suggest?
8. Make a recommendation Role positioning, appropriate range and any role-design issues requiring attention.
That is much more valuable than downloading twenty vacancies and calculating an average.
What should the Board or remuneration committee ask?
When presented with salary benchmarking, I would not simply ask: What's the median? I'd ask:
· Why were these comparator roles selected?
· How similar are they to ours?
· What are the important differences?
· How does our role compare in accountability and complexity?
· What does the full distribution tell us rather than just the midpoint?
· How does the recommendation fit our internal pay structure?
· What assumptions or limitations sit behind the analysis?
· Does the evidence tell us something about the design of the role itself?
If those questions cannot be answered, I would be cautious about using the benchmark to make a significant remuneration decision.
The median is evidence. It isn't the decision.
Good salary benchmarking is useful. It can identify where an organisation is significantly out of step with the market. It can support recruitment and retention decisions. It can provide independent evidence to Boards and remuneration committees. It can help organisations challenge assumptions. And sometimes it exposes much bigger questions about organisational design. But it works best when we remember what the numbers can and cannot tell us.
A median can tell us the midpoint of our chosen comparator salaries. It cannot tell us:
· whether we chose the right comparators;
· whether our job is properly designed;
· whether our title reflects our accountability;
· whether the organisation can afford the salary;
· whether the role fits coherently alongside others;
· what the organisation should ultimately decide.
Those require judgement. So the next time somebody puts a salary benchmarking spreadsheet in front of a Board and says: The market median is £58,000. I would ask one more question before discussing the number: What evidence tells us these are actually the same job?
Because if we cannot answer that, the median may be mathematically correct. It just might not mean very much.
Further reading
Charity Commission: The essential trustee (CC3)
CIPD: Job evaluation and market pricing