The Importance of Salary Benchmarking and Pay Equity in Finance Organizations

A high employee turnover rate is usually a sign that something is wrong with the employer. No one wants to go through the hassle of hiring people only to lose them a few months down the line.

Plus, in finance, a high employee turnover rate comes with substantial costs. You’re not losing fast-food workers; you’re bleeding out skilled accountants, controllers, and analysts who take institutional knowledge, client relationships, and operational stability with them.

Industry data shows voluntary turnover in finance roles is below average, but this doesn’t mean you should breathe a sigh of relief. Industry data may not look bad, but did you take a look in your backyard?

Can you safely say your specialists are happy with their current compensation and company culture?

Let’s see what you can do more and why compensation data is your most trusted source of information.

How to Use Salary Benchmarking to Drive Retention

Salary benchmarking tells you if there’s a significant pay gap between what you pay your people and what the market says they’re worth. Specialists recommend running a yearly checkup to stay up to date with industry standards, but you may want to run this comparison a bit more often for niche roles.

To get the entire picture, you need reliable market data, like industry compensation surveys, recruitment firms, or subscription-based databases that track salary ranges across job titles, experience levels, and locations.

Let’s take certified public accountants (CPAs) as an example. These specialists are in high demand, their skills are portable across industries, and their pay trends often foreshadow shifts in the broader finance labor market.

So, keeping an eye on CPA salaries and how much CPAs make is a strategic move if you want to make sure your people are happy with the current level of compensation in the company. If you’re not matching what the market is saying, it’s time to reconsider your salary strategy or risk losing highly skilled people.

The good news is that companies that stay on track with salary benchmarking tend to have a lower employee turnover rate, especially in critical roles. That’s because benchmarking is a great way to anticipate trends and shifts in the market.

Why Pay Equity Matters

If your employees suspect they’re being underpaid compared to peers in similar roles, it erodes trust, motivation, and loyalty. Furthermore, in finance teams, where analytical skills are the norm, people are even more likely to notice discrepancies.

Research shows companies that prioritize pay equity are 1.6 times more likely to achieve and exceed their targets and 1.7 times more likely to be innovative. However, it’s important to make sure you take a broad approach that identifies gaps across gender, tenure, or department lines. Sometimes, we’re blind to our own biases until something starts going wrong.

Additionally, it helps you decide which type of employees to keep on your team. For instance, in an accounting firm, you need CPAs, accountants, and audit or tax specialists. These are the people you should focus on keeping happy through compensation and more.

Other services, such as IT or payroll, customer support, and more, can be outsourced. In fact, outsourcing your accounting firm’s IT services lets you tap into top-tier specialists without the headache of managing their salaries.

Outsourcing also frees your budget and time, so you can focus more on the employees who keep the company running and growing.

Wrap Up

Proper compensation is the cornerstone of talent retention, motivation, and equity. Getting it right keeps top performers engaged, reduces costly turnover, and builds a culture where employees feel valued. In today’s competitive market, smart pay strategies drive business growth and long-term success.

FAQ

What is salary benchmarking?

Salary benchmarking is the process of comparing your organization’s compensation levels to those of similar roles in the market to ensure that your employees are fairly compensated.

Why is pay equity important?

Pay equity is important because it ensures that employees are compensated fairly for their work, which leads to higher levels of trust, motivation, and loyalty within the organization.

Conclusion

By utilizing salary benchmarking and prioritizing pay equity, finance organizations can effectively retain top talent, reduce turnover costs, and create a culture of fairness and transparency. Investing in competitive compensation strategies not only benefits employees but also drives business growth and success in the long run.