The Science of Executive Benchmarking
– An Advanced Approach with Extended Precision
Compensation benchmarking is directed by the Rule of Substitution. It states that the suitable benchmark group shall be composed of the probable incumbents that could be hired for the current position and the probable positions that the current incumbent could leave for.
The appropriateness of the benchmark group is determined by the relevancy of the incumbents. For example, a proficient programmer could be a close, although not exact, substitute for a system analyst position in the sense that both are evolved from the IT stream varied by the degree of sophistication. In
contrast, a unique position of an organisation may not exist elsewhere, but one can always look for the second best in the line (e.g. experience or background match) as a starting point for pay evaluation.