Can benchmarking compensation MAKE or BREAK your culture?

A 2023 Harvard Business Review study found that organizations using structured salary benchmarking paid, on average, 6% higher wages ..... and saw significantly lower turnover compared to those that didn’t (HBR).

That’s the power of benchmarking done right: it doesn’t just set numbers, it shapes culture.

Because pay isn’t only about the paycheck ....... it’s about fairness, trust, and whether employees believe they’re valued.

• In Canada, six major banks relied on peer-to-peer comparisons. The result? Widening pay disparities at executive level and growing public criticism (Meridian Report).

• A global survey found that while 69% of employees know their total pay, only 38% understand how it’s determined (Beqom). That lack of clarity breeds mistrust and disengagement.

When Benchmarking Falters: A Culture at Risk

Benchmarking done poorly—or not at all—can quietly erode trust, skew perception, and fuel attrition. Consider this:

• Transparency doesn't always mean clarity. A striking 69% of employees know their total pay, but only 38% understand how it’s calculated. That lack of clarity breeds suspicion—and increases turnover risk.HR Dive+12beqom.com+12nhrma.shrm.org+12Harvard Business Review+4CultureMonkey+4WorldatWork+4

• Turnover isn’t just about money. Gallup finds that 37% of employees leave due to poor engagement or company culture, making it a bigger driver than compensation itself.CultureMonkey+1

• Recognition matters—deeply. Employees who receive high-quality recognition are 45% less likely to leave within two years, and 65% less likely to actively search for another job.The Times of India+14Gallup.com+14CultureMonkey+14

These numbers remind us: it’s not just about matching the market—it’s about building trust, clarity, and engagement.

On the other hand

• MahaMetro (India, 2024): Partnered with IIM Nagpur to benchmark not just salaries but also recognition policies. The goal? Engagement, transparency, and talent attraction (Times of India).

• Gallup research: Pay transparency reduces resignation risk by 37%, showing that clarity is as powerful as the numbers themselves (Gallup).

When Benchmarking Gets It Right: Culture Thrives

Strong benchmarking doesn’t just pay fairly—it communicates values and supports culture:

• A recent Harvard Business Review study found that benchmarking led to roughly 6% higher average wages, and importantly, improved retention.NetSuite+3Harvard Business Review+3Lattice+3

• OneDigital’s advice is golden: use at least two reputable data sources, age the data, match roles carefully, and include both salary and benefits in your analysis.OneDigital+1

• NetSuite adds that employees respond positively to benchmarking when it keeps compensation transparent and equitable. It also flags that benchmarking should cover benefits, incentives, and bonuses—not salaries alone.NetSuite

• The IIM Nagpur–MahaMetro collaboration, launched just weeks ago, demonstrates a deliberate, research-led approach—mixing qualitative and quantitative methods to align pay, benefits, and recognition with best practices. The goal? Better engagement and retention.The Times of India

Benchmarking is often mistaken for a quick market check. But real benchmarking is deeper and more strategic:

• Role clarity → Defining clear job families and levels.

• Reliable data → Using multiple sources, not one survey or anecdote.

• Total rewards → Looking at salaries and benefits, bonuses, recognition.

• Transparency → Explaining the “why,” not just the “what,” to employees.

Benchmarking compensation isn’t just a numbers ..... it’s a leadership choice that influences fairness, culture, and retention.

Benchmarking isn’t about copying the market. It’s about deciding, with clarity, where you want to stand in it.

“Paying good wages is not charity at all — it is the best kind of business.” — Henry Ford

I’ll be unpacking it further on the later episodes of #UnwrittenRules podcast ,exploring the hidden pitfalls and real wins behind compensation strategies.

📚 Sources & Further Reading

• Harvard Business Review → Why Your Organization Should Use Salary Benchmarking (2023)

• Meridian Compensation Partners → Review of Horizontal Benchmarking in Canadian Banks (2022, PDF)

• Beqom → A Crisis in Compensation Clarity (2023)

• Gallup → Employee Retention Depends on Getting Recognition Right (2023)

• Times of India → IIM Nagpur & MahaMetro Launch Remuneration Benchmarking Study (2024)

#BusinessVibes hashtag#SalaryBenchmarking hashtag#PeopleAndCulture hashtag#RetentionStrategy hashtag#GrowthStartsAtTheCORE


1st Sep 2025