Salary Competitiveness Ratio (SCR) together with other employee-related KPIs can help in gauging your company’s competitiveness as a potential employer. SCR may tell you if your employees are going to be tempted by salaries your competitors offer.
Why is it important?
Don’t believe hear sayers who tell you that remuneration is not the most important motivator for employees. Often if employees leave, it’s because of salary. Yes, there are many other factors to take into account, but SCR may be the top KPI to consider as you don’t want to tempt good employees to leave because of pay.
What questions does KPI answer?
1) How competitive is our salary?
2) Are we paying our employees enough?
3) Will our employees be tempted by external salary offers?
KPI target
A high rate is good, but too high may be a sign of overpaying. You want to be paying a competitive rate without paying too much. Consider adding extra payments to employees into the calculations if this is standard practice in your organisation (e.g. bonuses, commission, etc.)
Data sources
Competitor salaries or market rates can be sourced via research, paid data providers or from recruiting websites. Company salaries are sourced from the company's HR and Payroll systems.
KPI Formula
SCR = Company Salary / Competitor Salary, or
SCR = Company Salary / Market Salary
Below is a detailed KPI map:
