How to pay competitively and fairly: 5 tips for remuneration professionals to maximise your benchmarking approach

   

Here are five essential principles to apply to your benchmarking approach to ensure fair and competitive decisions.

1. Operate with clear principles upfront

Fair pay begins with a clearly articulated set of compensation principles. What does fairness mean in your organisation? Is it about internal equity, market competitiveness, or performance-based differentiation? Defining these principles early helps prevent ad hoc decisions that may lead to inconsistencies or biases.

One common challenge remuneration professionals face is how to compare jobs that are paid above or below the market rate. Aon recommends a starting point at the median (50th percentile), with differentiation based on performance within the market quartiles. This ensures that pay remains competitive while allowing for merit-based adjustments.

Another important consideration is benchmarking roles against consistent standards. Organisations can achieve this by comparing jobs to independent benchmark roles and evaluating attributes such as responsibility level and functional competency across a common set of factors. This structured approach helps ensure pay decisions remain equitable across functions and geographies.

Pay fairness also requires an understanding of why employees at similar levels may receive different compensation. The reality of the talent market means that certain jobs may command higher pay levels due to the demand, their specialization, scarcity of skills, or industry-specific constraints. Transparency about these factors can help manage employee’s understanding, their expectations and foster trust in pay decisions.

2. Know your market influences on pay

The compensation landscape in Asia Pacific is diverse , shaped by economic cycles, talent mobility, and regulatory changes, to name a few. Market influences such as inflation is often one of a range of factors to consider when making pay decisions. While inflation is a key driver of salary expectations today, it is also essential to take a long-term view. Reacting too quickly to short-term pressures without considering broader trends can lead to unsustainable pay structures that can be difficult to manage in the future.

Being a well-informed remuneration team is essential, as these influences change not just year to year but month to month. In a fast-changing pay landscape, having reliable, recent and relevant data at your fingertips could be the difference between winning and losing your top talent. The Aon Human Capital Analytics (HCA) platform is refreshed four times per year so that you can make informed decisions based on the most recent data available.

3. Recognise differences and diversity, including emerging markets

Talent markets are highly diverse, with significant variations between developed and emerging economies. Hiring in emerging markets requires a more tailored approach, as there are instances where reliable or consistent pay benchmarks can be difficult to find, and talent competition is often intense. Without clear reference points, companies must rely on alternative data sources, industry insights, and local expertise to develop competitive yet sustainable pay structures.

We also see that emerging markets have different pay structures compared to more established and mature locations. Compensation models, benefits, and incentive structures often vary widely, reflecting local economic conditions, regulatory environments, and cultural expectations. Understanding these differences is critical to securing and hiring the best potential talent while ensuring fairness and competitiveness

   

4. Have an adaptable strategy for real-time employee situations

Common situations will arise where employees request pay adjustments based on external comparisons. Employees may ask for compensation to be matched to peer levels, request increases to match an external offer, or new hires may command higher salaries than existing staff. Managing these scenarios effectively requires a structured approach to ensure fairness and internal relativity among your employees.

One effective approach to managing these situations is This is why companies develop salary bands underpinned by market benchmarking —providing a framework that allows employees to move within the band based on performance and tenure while maintaining internal consistency. A well-defined and market competitive band structure helps ensure pay equity and prevents knee-jerk salary adjustments that may lead to long-term imbalances.

5. Carefully design your approach for recognizing promoted employees

Aon’s 2024 Global Salary Increase and Turnover study shows that talent identification has shifted from a niche practice to a mainstream strategy, with 77% of organisations now identifying top performers. As this trend grows, it is likely to intensify one of the most common pay fairness challenges—managing compensation for newly promoted employees. If not managed carefully, promotions can lead to pay compression, where newly promoted individuals earn salaries close to or even lower than longer-tenured colleagues in the same role.

To avoid this, organisations should establish clear salary progression frameworks. A structured approach—such as defined pay bands, promotion bonuses, or step increases—ensures fairness while maintaining financial sustainability. Moreover, benchmarking promoted employees’ salaries against external market rates helps prevent inequities from developing over time.

Beyond financial compensation, organisations can also consider non-monetary rewards for promoted employees. Career development opportunities, leadership training, and expanded responsibilities can enhance the perceived value of a promotion, reinforcing employee engagement and retention.

Actions you can take

Maintaining a fair and competitive pay strategy is an evolving process that demands continuous assessment and flexibility. In the dynamic markets of Asia Pacific, organisations that prioritize transparency, leverage data-driven insights, and implement adaptable pay structures will be well-equipped to ensure both fairness and competitiveness in their compensation practices.