Top tips for getting your pay data in better order

Getting your pay data in good order is an ongoing cycle of benchmarking, validation, analysis, total reward understanding and clear communication.

In today’s employment market, having your pay data in sound shape is now a strategic imperative.

Median pay awards are forecasted at 3% in 2026, compared with 6% median awards just three years ago. This shrinking pay pot means HR need to lean into robust data and market analysis to position their organisations competitively, fairly and sustainably.

1. Pay Benchmarking: Choose the correct source and use it well

Pay benchmarking is the backbone of any sound reward strategy. It allows you to compare your organisation’s pay practices against equivalent roles in relevant markets, helping to attract and retain talent while maintaining internal equity.

Remember, though, that the right data source will depend on your sector, scale and future business plan. You may need to blend multiple sources to get a comprehensive picture.

Top tips:

Match surveys to your organisational context: Consider sector-specific or specialist surveys to unmask any nuances hidden or ignored by general market data, particularly for niche or highly technical roles.
Define your peers: When you choose your benchmarking comparators, think about where you recruit from and lose talent to, not only size or industry.
Assess age and relevance of data: Make sure the data you use is current and, where needed, adjust older datasets to maintain accuracy.

2. Validate your data: Rigour drives confidence

Benchmarking is only as good as the data you compare with. Ensuring accuracy and consistency in your internal data (from job descriptions to job levels) is fundamental. Equally, involving the right stakeholders early creates shared ownership of the outcomes.

Top tips:

Standardise job definitions: Use a consistent job evaluation framework to make sure roles are evaluated and graded correctly.
Engage the right stakeholders: Ensure you have senior stakeholder sign-off on the approach, and engage with managers on the ground to avoid any blind spots or assumptions.
Build in fail-safes: Run internal audits to make sure your data is error-free, particularly for base pay, allowances and bonuses.

3. Analyse against the market: Understand your gaps

Once you have clean internal data and robust external benchmarks, the hard work can start: interpreting what you learn from the comparison. This analysis needs to go beyond simple numbers and explore context. What’s a competitive rate in your area or sector? Do you need to make allowances for particular skills?

Top tips:

Set your strategic pay stance: Decide whether you intend to lead, match or keep within a certain distance of the market and analyse your data through that lens.
Identify any priorities: Not all roles carry equal market pressure, so differentiate your analysis by function, level or talent scarcity.
Work with trends not snapshots: For stronger budget forecasting, try to understand whether gaps are persistent or emerging.

4. Capture the total reward package

Market benchmarking isn’t just about base pay. With companies facing external market pressures and changing workforce expectations, you need a fuller picture of competitiveness and fairness in "Total Reward".

This includes analysing data on allowances, bonuses, benefits, development opportunities and progression to understand the competitiveness of the full total reward package.

Top tips:

Include variable pay and perks: Also benchmark cash bonuses, long-term incentives and benefits if they influence retention or recruitment.
Consider spend and utilisation of benefits: Interrogate the usage of benefits to understand if you are getting value from your spend.
Ask employees: Carry out feedback sessions, such as focus groups or surveys, to capture what employees value as part of the package.

5. Communicate: Turn your data into action

Even perfect data can mean very little if employees don’t understand or trust what comes out of it. A common pitfall is underestimating the power of communication. Transparency drives engagement, especially when pay decisions affect belief in fairness and career progression.

Top tips:

Tailor your message: Different audiences need different narratives: executives care about strategic impact while employees care about fairness and transparency. Consider tailoring your comms to each group.
Educate and empower managers: Turn line managers into your ambassadors by equipping them with talking points to explain pay positioning and decisions.
Use visuals and tools: Charts and dashboards available in newer HR tech tools can make complex pay data more accessible and reduce confusion.

Getting your pay data in good order is an ongoing cycle of benchmarking, validation, analysis, total reward understanding and clear communication.