New report finds few employers fully aligning pay with skill demands
Only one in five employers in Australia believe the compensation they offer fully reflects the skills and experience required for a role, according to a new report, underscoring the need for a proactive approach to salary benchmarking in order to attract top talent.
New findings from Robert Half revealed that 87% of employers believe their compensation broadly reflects the skills and experience required for the roles they are hiring for.
However, just 21% of them believe that this compensation is "fully aligned" with the skills and experience required for the position.
Most employers believe the compensation is "mostly aligned" or appropriate for the level of skills and experience they need, while 25% said the compensation is only "moderately aligned" or somewhat reflective of their requirements.
On the other hand, 12% of employers said the compensation they offer is "generally lower" than expected, while one per cent said it is "significantly below" what the skills and experience warrant.
Nicole Gorton, director at Robert Half, commented that organisations that align pay with their requirements are well-positioned to meet evolving market expectations.
"Pay has always been king, and in today's market, how compensation aligns with a candidate's skills and experience is often a decisive factor in whether a role is seen as a good match," she said in a statement. "What distinguishes leading organisations is a proactive, data-driven approach to salary benchmarking."
Proactive salary benchmarking in practice
Gorton said regularly recalibrating pay to evolving skills demands is essential to maintaining hiring momentum.
"An effective salary benchmarking process combines reliable market data with a clear understanding of the role's responsibilities, required skills and level of experience," Gorton told HRD Australia.
"It should also reflect what employers are realistically offering and what candidates with comparable skills are expecting in the current market."
She said formal salary reviews should be conducted at least annually, while also monitoring roles where skills, candidate expectations or market conditions are shifting.
"Regular benchmarking helps employers identify potential pay gaps early and remain competitive when attracting and retaining talent," Gorton added.
Benefits of aligning pay
Organisations that have fully aligned pay with their required skills and experience said it improved their ability to secure preferred candidates (51%).
However, just 17% of employers who admit their compensation is not at all or only slightly aligned with the skills and experience required acknowledged that it has negatively impacted their hiring process.
Seven in 10 employers even believe that pay misalignment had little impact on their ability to secure preferred candidates.
Gorton acknowledged that salary is not the sole driver of employees' decisions, but pointed out that it sets the "baseline" for perceived value.
"When remuneration accurately reflects skills, expertise, and role complexity, employers materially improve their ability to attract and secure preferred talent," Gorton said.
"Flexibility, culture, and career development are also powerful differentiators but they are most effective when built on a competitive salary foundation."
