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Tip Tuesday: Benchmarking How Competitors Compensate Employees

January 21, 2020

Benchmarking how competitors compensate their employees is an important tool when engaged in collective bargaining. How can you make sure you are conducting an “apples-to-apples” comparison? You need to identify a comparable group of companies in your industry.  Here are some important benchmarks:

  • Comparable Annual Revenues. It is not useful to compare a company that generates $5B to one generating $40B.
  • Profitability. It is hard to compare a company with profit margins of 20 percent to one generating 5 percent.
  • Total Number of Employees. Employees help to generate revenues, so comparability in number of employees is important.
  • Type of Equipment. The size of your equipment can determine how much revenue is generated by each piece of equipment.
  • Marketing. Does your company generate revenue by selling a similar product?
  • Markets Served. The breadth and depth of how many markets you operate in is also a key to generating revenues.
  • Niche in the Marketplace. How does the consumer identify your product—are you selling low cost/high value or premium services?