It is possible for companies to develop compensation systems that are internally consistent and market competitive, but it is very difficult. In order for a company to do so, they must be regularly researching the market and adjusting their compensation systems to align with the market. This can be quite tedious. Advanced HR systems have assigned teams to monitor the market’s compensation systems and still cannot keep up because it is ever adapting. Tech is a great example. There are new updates about tech compensation systems, benefits, accommodations, etc. ever since the start-up/tech boom. The only way for tech companies to recruit and retain talent, they must stay competitive within the market.
The biggest challenges to developing internally consistent and market competitive compensation systems are the time associated with analyzing markets, cost of living in certain areas, and the overall health of the labor market.
With technological advances, like Glassdoor and PayScale, they take a lot of the guessing of it. Employees no longer must coyly ask their friends or coworkers about their compensation packages. They have everything at their fingertips from these user-generated sites. While these sites are likely trustworthy, there is a good chance they are not totally accurate. It is fair to question whether HR professionals within companies can heavily rely on sites like Glassdoor and PayScale, but it is generally good guidance. We have also experienced a bit of a societal shift where people are more freely talking about their jobs and compensation packages amongst themselves.
