Why You Can’t Afford to Ignore Compensation Metrics
When operations feel steady, it’s tempting to assume your compensation strategy is effective. But without measuring compensation effectiveness, you risk unseen issues like silent turnover, disengagement, and uncompetitive salaries. HR leaders need reliable, ongoing insights to make compensation a strategic advantage—not a cost center.
Let’s explore the key metrics you should be tracking to evaluate the true effectiveness of your compensation program—and how technology like SimplyMerit simplifies the process.
How To Measure Compensation
1. Attractiveness to Job Seekers
To remain competitive, start by measuring how your compensation influences recruiting outcomes:
These indicators reveal whether your pay aligns with market expectations. If compensation is a frequent reason for offer decline, your packages likely need adjustment.
MorganHR POV: Tracking just time-to-fill isn’t enough. Segment rejection reasons to understand whether compensation is the bottleneck—then act accordingly.
2. Employee Retention and Satisfaction
Retaining top talent is even more critical than attracting it. Evaluate:
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Turnover rate by department and position
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Average tenure
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Exit interview data tied to compensation
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Survey feedback on pay fairness
If employees frequently report feeling underpaid—even inaccurately—that’s a signal to reassess both actual pay levels and your transparency around them.
Use regular pulse surveys to detect dissatisfaction early. Ask questions like:
Use these responses to drive real conversations—not assumptions.
3. Market Competitiveness
Benchmark your pay data against industry standards. Start by:
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Comparing job titles, responsibilities, and pay to similar roles externally
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Identifying “unicorn” roles that don’t map easily to market data
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Addressing title inflation that makes comparisons difficult
Companies with overly unique titles often struggle to develop consistent pay structures. Normalize roles where possible to improve clarity and competitiveness.
Data Insight: A 2024 survey by SHRM found that 72% of candidates research salary ranges before applying—reinforcing the need for externally aligned pay ranges.
4. Compare positions within your own company.
We’ve all heard the news stories about “fat cat” CEOs making millions upon millions every year while their employees scrape by, barely making ends meet. That situation is a PR nightmare that can lead to dissatisfied employees, unhappy shareholders, and a tarnished public opinion of your company.
We advise comparing executive vs. non-executive salaries to keep your compensation levels in balance. Don’t forget to look at executive commissions, bonuses, and stock equity in addition to salary, as these factors can make a big difference in your final numbers.
Remember that often what seems fair on the surface actually isn’t as fair when you look a little bit deeper.
If you apply a flat 4% raise to everyone in your company, that sounds great. However, if you’ve got some people making $100,000 and others making $50,000, you’ve actually just increased the disparity between those positions by opting for a blanket percentage raise.
While you’re running these numbers, you can also compare other categories, such as commercial vs. non-commercial (those who get bonuses, tips, and commissions and those who receive fixed hourly wages or salaries) and employees who have access to overtime vs. those who don’t.
Within the last category, you’ll want to be able to answer the following questions:
- Are all employees equally able to take advantage of overtime opportunities?
- Are some employees overburdened, perhaps taking on too much overtime and getting burned out?
- Do employees feel forced to take overtime, whether it’s because they think it’s required or simply to make ends meet?
When comparing positions against each other, look into some of the potential reasons one particular employee might be making more or less than someone else before you decide whether the pay for that role is fair or not.
Keep the following in mind:
- Some people may have spent far longer with the company than others.
- Some people pursue continuing education frequently while others tend to coast for a while.
- One person may have worked in the field (even if it was at another company) for a decade, while someone else just switched to a new career and lacks the same depth of experience.
Finally, look for racial, gender, or other demographic disparities that may send up a red flag that someone isn’t making what they should be compared to the rest of your staff.
5. Compare each person’s pay against itself over time.
No one wants to begin a new job and then receive stagnant pay for years on end. However, continuing education, promotions, and scope changes aren’t always reflected in a person’s pay when they should be. Conversely, someone’s pay might inflate alongside everyone else’s when that person doesn’t necessarily perform well enough to justify such increases.
Keep your employees’ pay on track by measuring:
- How long each person has been in their position
- The certifications, training, and continuing education each person has received
- Each employee’s job performance over time
- How much each person’s pay has changed due to the above factors
How on earth do you keep track of all these metrics? Keep it simple with SimplyMerit.
If you were to try to manually track everything we’ve discussed here using a spreadsheet, you’d never have time for anything else. The second an employee received a promotion, underwent training, switched to a new position, or got a performance evaluation, you’d have to make those updates by hand and then run your numbers all over again.
It’s no wonder most HR professionals get overwhelmed trying to stay on top of changes within their organizations.
SimplyMerit makes it easy to track custom metrics automatically and make informed decisions, even when circumstances are constantly shifting. It also gives you a ready-made data set to hand to your executive team when they ask why you’ve proposed certain changes.
No matter what your company’s philosophy is—whether you want to prioritize your extra revenue for underpaid but high-performing employees, set aside a percentage of the budget for staff training, or something else entirely—SimplyMerit allows you to be sure your dollars are going exactly where they need to go. Just ask our SimplyMerit customers what a difference dedicated compensation management software has made in their lives.
Contact MorganHR with questions, or get started right away!
