This phrase represents a method of evaluating the pay and benefits provided to individuals employed by a specific corporation in relation to similar remuneration packages offered by other companies. It involves gathering data on salary, bonuses, stock options, and other benefits at the target firm and comparing it against data from peer organizations. This comparative analysis is used to determine if compensation is competitive within the relevant industry and geographic location.
The process is essential for several reasons. It ensures that the corporation can attract and retain top talent, as competitive compensation is a key factor in employee job satisfaction and career choices. It also assists in managing costs effectively by preventing overpayment or underpayment. Historically, formal comparison practices have evolved from informal surveys and networking to sophisticated data analytics platforms that provide detailed compensation benchmarks across numerous sectors and roles.
