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Compensation Benchmarking Starter Guide

Provided by Catapult HR: a practical guide to market pricing and building salary ranges.

Defining Benchmark Roles

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Select roles that are common across your industry and can be matched to external survey data
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Focus on positions that represent at least 70% of your workforce to maximize coverage
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Use job content (duties, scope, complexity) for matching — not job titles alone
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Include a mix of individual contributor, management, and executive roles
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Document your matching rationale for each benchmark position

Selecting Data Sources

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Published surveys: Payscale, Mercer, Radford, Willis Towers Watson, SHRM, BLS
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Industry-specific surveys: Available for healthcare, tech, finance, nonprofits, and more
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Geographic adjustments: Use data cuts for your metro area or region when available
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Use at least 2–3 data sources for each role to triangulate a reliable market rate
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Ensure survey data is current (published within the last 12–18 months) and age it forward if needed

Market Pricing Methodology

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Determine your target market position: 25th, 50th (median), 75th percentile, or a blend
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Calculate a weighted average when combining multiple survey sources
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Age data forward at 2.5–3.5% per year from the survey effective date to the current period
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Account for total compensation (base + bonus + equity) vs. base salary only
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Document assumptions and methodology for internal stakeholders and auditors

Building Salary Ranges

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Set range midpoint at your target market position for each grade or level
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Typical range spread: 40–50% for non-exempt, 50–60% for professional, 60%+ for executive
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Calculate minimum and maximum: Midpoint ÷ (1 + half the spread) and Midpoint × (1 + half the spread)
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Ensure ranges overlap between adjacent grades by 10–20% to allow for growth
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Validate ranges against your current employee pay to identify compression or outliers
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Review and update ranges annually based on fresh market data and merit budget

Pay Transparency Laws (2025 Update)

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States requiring pay range disclosure in job postings: CA, CO, CT, HI, IL, MD, MN, NJ, NY, RI, VT, WA
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States requiring pay range on employee request: NV, OH (proposed), and others pending
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Salary history bans: 21+ states and localities prohibit asking about prior pay
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Multi-state employers should apply the most restrictive standard across all locations
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Document your pay range methodology to defend against pay equity claims
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Train hiring managers and recruiters on disclosure requirements before posting roles

Need expert help implementing these practices? Catapult’s HR team is here for you.

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