Salary Benchmarking for Highly Regulated Industries

Salary benchmarking is essential for accurately compiling competitive compensation structures in highly regulated industries. Utilizing compensation benchmarking data can significantly enhance this process. It informs employee compensation, supports pay transparency, and helps organizations attract and retain talent in tight labor markets. For employers operating in healthcare, construction, cannabis, casinos, and other compliance‑heavy environments, salary benchmarking serves as a north star for human resource teams, guiding fair pay practices, ensuring regulatory alignment, and enabling data‑driven decisions.

This blog walks through how salary benchmarking works in regulated environments, what makes it different, and how to build a defensible, repeatable process that holds up under scrutiny.

Salary Benchmarking Defined for Regulated Employers

At its core, salary benchmarking is the process of comparing internal compensation against external market data to determine appropriate compensation for specific roles. It is often used interchangeably with compensation benchmarking, though the two are not always identical.

• A market reference point is a single data value (often the median or average salary) for a role in the job market.
• A pay range or salary range, by contrast, reflects a structured band (minimum, midpoint, maximum) designed to support hiring, progression, and internal equity.
• Total compensation benchmarking further expands the scope, incorporating cash compensation, incentives, and benefits (such as health insurance and retirement options) into a comprehensive salary view.

 Shift differentials, overtime, credential premiums, and compliance‑driven incentives (think on-call premiums or hazard pay) all factor into the compensation package. These pay components exist because compensation must reflect not just time worked, but difficulty, risk, scarcity, legality, and business necessity. Therefore, compensation benchmarking is often the more accurate phrase because an employee’s total compensation extends well beyond their base salary.

These inputs then inform critical decisions, including:

• New hire offers
• Pay range and salary band design
• Performance reviews
• Promotions and internal movement
• Retention adjustments

When done correctly, benchmarking helps employers align with market rates while maintaining internal consistency.

Why Regulated Industries Feel The Pain First 

Many roles require specific licenses, credentials, or a higher level of experience, which drives up pay expectations and narrows the pool of qualified candidates. Highly regulated employers tend to feel salary benchmarking challenges more than most industries. Their roles are often specialized, with smaller talent pools and higher turnover, which makes clean comparisons harder to find. When regulations shift or expand, job responsibilities can change quickly, making market data or salary surveys outdated faster than usual, and complicating both hiring and retention. For example, a construction company benchmarking pay for a site supervisor may struggle to find good comparisons. Required certifications and regulatory knowledge limit the talent pool, and when labor or safety laws change, pay expectations can change quickly, making standard benchmarks unreliable. 

Hiring urgency often collides with compliance scrutiny, creating risk when salary decisions are rushed or poorly documented. When speed takes priority over structure, organizations increase exposure to audits, pay‑equity issues, and costly downstream corrections. In regulated environments, pay decisions must be defensible, consistent, and aligned with both internal equity and external benchmarks, especially since pay practices are highly visible. Complex structures, such as tipped roles, overtime‑heavy positions, or shift premiums, can be misconfigured, leading to inconsistency and unpredictable costs. Without clear, defensible benchmarking data, these decisions are difficult to justify under audit, where regulators expect repeatable methodology, consistent data, and a clear rationale.

Salary Benchmarking vs Pay Equity Analysis

Salary benchmarking answers the question: How do companies pay for this role in the external market?

Pay equity analysis answers a different question: Are employees paid equitably within the organization after accounting for role‑related factors?

Benchmarking can inform equitable compensation, but it cannot replace pay equity analysis. A common risk is using market data as a blanket justification for inequities. Effective salary benchmarking must be paired with an internal compensation review to ensure competitive and fair outcomes.

Why Salary Benchmarking Matters to the C‑Suite

Offers most often break down not on base salary alone, but on differentials such as sign‑on bonuses, total benefits, overtime pay, or specialty premiums. For executive teams, salary benchmarking reduces uncertainty and speeds decision‑making by creating the initial guardrails for these decisions. By grounding compensation strategies in data, leaders can reduce guesswork and shorten approval loops. 

It’s also strategic. Clear salary structures help identify whether overpay drift is occurring or whether the organization is intentionally pursuing a market‑leading pay strategy. This supports budget discipline without sabotaging hiring plans. When leaders can see market salary rates, internal salary positioning, and pay range logic together, compensation planning becomes proactive rather than reactive.

Just as importantly, salary benchmarking supports narrative consistency.  When executives are asked to justify pay decisions, a recordkeeping mindset (documenting sources, filters, and outcomes) ensures leadership can explain why decisions were made, not just what was decided.

Salary Benchmarking Data Sources You Can Trust

Survey Providers and Established Datasets

Traditional compensation surveys remain a cornerstone of salary benchmarking. A well-designed salary survey provides aggregated data across peer companies, offering insight into average salary, percentiles, and compensation trends. However, surveys are only effective when their scope matches your true talent competitors. Employers should benchmark against organizations that compete for the same labor pool, not necessarily the same product market.

Platform-based Benchmarking Tools and Software

Modern benchmarking tools offer faster access to market data with flexible filters. Keep in mind, it is critical to distinguish between range guidance and decision automation. Tools should support compensation decisions, not replace human judgment or compensation philosophy.

Free Public Compensation Data or Tools

Free data sources can be useful for early scoping and sanity checks. Public survey data and user‑reported salary data may help establish directional ranges, especially for emerging roles. Where free data fails is consistency. Inconsistent leveling, missing compensation components, and stale market data introduce risk. Employers should never rely on a single free salary benchmarking tool as their sole source.

Salary Benchmarking Methodology and Best Practices

1. Start With Compensation Philosophy and Target Percentiles

Every salary benchmarking process should begin with a clear compensation philosophy. Are you targeting the median market rate or positioning closer to the 75th percentile for hard‑to‑hire roles?

• TIP Median can be efficient for stable roles with strong pipelines. Higher targets can make sense where scarcity, credentials, or criticality drive competition.

A single target percentile across all roles rarely reflects reality. Different job families often require different targets. Clinical, field, plant, and HQ roles may justify different benchmarks based on labor scarcity, credentials, and risk exposure. This keeps the compensation philosophy truthful and actionable.

2. Build a Job Architecture Before You Benchmark

A job architecture is an organization‑specific framework that defines how roles are structured and related across the company.

• TIP Group jobs by families, functions, levels, or profiles 

When organizing, keep in mind the title sprawl, often seen as tiered levels to roles that are actually very similar in scope, level, or responsibility. This can look like Manager, Senior Manager, Manager II, or Associate Manager, creating inaccurate, inconsistent, or confusing benchmarks. Having a plan for promotions and truly unique roles, such as hybrids, player‑coach positions, or site leads, ahead of time helps preserve benchmarking accuracy and prevents ad hoc exceptions later.

Keep in mind, you don’t have to benchmark everything at once. Many organizations begin with roles that carry high compliance exposure, high attrition risk, or high revenue impact, then expand coverage as the job architecture and benchmarking process mature.

3. Define The Peer Group You Actually Compete With

Peer groups should reflect the real, external labor market: industry, geography, organization size, growth stage, union presence, credential/experience requirements

• TIP A role match checklist keeps your process consistent. It outlines essentials like candidate qualifications, credentials, working conditions, and salary to quickly identify top applicants and filter out those who may not meet the criteria. 

In tight labor markets, compensation isn’t as simple as supply and demand. Required certifications, professional licenses, and background checks limit who can legally perform the work, increasing scarcity and often elevating market pay expectations. Union environments introduce negotiated wage floors, step progressions, and defined premiums that influence both external benchmarks and internal pay structures. Safety‑sensitive roles (such as clinical care, heavy equipment operation, security, or surveillance) carry higher accountability and regulatory exposure, which the market often prices through premiums, differentials, or accelerated progression. These factors make role matching more complex and reinforce the need for salary benchmarking that reflects real job requirements, not just titles or generalized market averages.

4. Handling Roles That Don’t Map Cleanly

When roles don’t map cleanly, use a disciplined “like vs like” approach instead of forcing a perfect match.

• If your internal role matches at least 75% of a survey’s job description (not just the title), it is considered an acceptable match. If it falls below 50%, look for a better fit or a “roll-up” code.
• For roles that bridge two disciplines, find two survey codes and blend their data to create a custom hybrid benchmark.
• Instead of mapping by title, map by level (such as entry level vs. senior), and align your internal levels with the survey’s career levels to avoid comparing different scopes of responsibility.

5. Consider Aging, Weighting, and Composites

Since market data is a snapshot of the past, you can manually age data whenever you are using static reports that are greater than 6 months old (typically 3-4% annually in the current market).  If you use modern real-time platforms, verify if they already apply lead-lag modeling to project figures to the current date. Once your data is current, create a composite by blending sources, assigning higher weights to surveys that most closely mirror your industry or geography, and applying premiums or discounts (5-10%) if your internal role requirements are significantly more or less complex than the survey standard. 

Industry Best Practices and Pitfalls

Healthcare Salary Benchmarking

Don’t ignore or assume credential ladders (professional advancement tiers).

• Pitfall: Benchmarking against general medians instead of specific ladder tiers leads to artificial undervaluation and the loss of your most highly-skilled talent.

Temporary crisis rates for travel staff can reach 2x to 3x the standard hourly rate during acute nursing or specialty shortages.

• Hard-coding these temporary spikes into permanent base salary scales creates a massive fixed-cost trap that remains long after the labor shortage has eased.

Construction Salary Benchmarking

Base pay is often mandated by “Davis-Bacon” or CBA (Collective Bargaining Agreement) rates, which change based on the specific county or trade.

• Pitfall: Treating these as optional perks. If you don’t pay the fringe into an approved plan, it must be paid as taxable cash, drastically inflating the base.

Field staff often receive daily per diems, travel pay, or tool stipends to offset the costs of remote work and equipment.

• Pitfall: Mixing reimbursements (non-taxable) with compensation (taxable) during benchmarking can lead to phantom high salaries that don’t actually reflect the take-home pay needed to attract talent.

Cannabis, Hemp, and CBD Salary Benchmarking

This emerging industry lacks standardized job titles, making it difficult to find apples-to-apples comparisons, especially across different state lines.

• Pitfall: Matching by title alone without auditing the specific risk and responsibility of the role can result in underpricing high-risk compliance roles.

Roles involving heavy cash-handling or high-security clearance require a higher premium due to the physical and legal risks involved.

• Pitfall: Failing to factor in a risk premium for these positions could result in high turnover within critical security positions.

Casinos and Gaming Salary Benchmarking

Dealers and servers often have a low base pay because tips or service charges can encompass 50–70% of their actual income.

• Pitfall: Benchmarking only the hourly base rate ignores the tip-out culture that actually drives retention.

Surveillance, security, and gaming floor roles require intensive state gaming licenses and background investigations.

• Pitfall: Ignoring the cost and time it takes for licensed personnel to get cleared creates a barrier to entry that you often end up paying extra for to overcome.

Next Steps for Human Resource Teams

A defensible compensation program is built on three things working together: trusted data sources, a consistent methodology, and clear governance. When all three are in place, pay decisions are easier to explain, easier to maintain, and easier to defend.

In the first 90 days, focus on creating a reputable foundation by analyzing data to inform your compensation strategies.

• Define job architecture, peer groups, and KPIs
• Source data, map roles, and establish initial ranges

By 12 months, success means a mature program with documented processes, refined ranges, and audit‑ready, transparency‑aligned decisions.

• TIP Track KPIs such as offer acceptance rates, compa‑ratios, internal salary alignment, pay equity outcomes, and turnover in benchmarked roles. These indicators show whether salary benchmarking helps the organization remain competitive.

As pay transparency laws expand, organizations that invest in effective salary benchmarking today will be best positioned to attract and retain top talent with competitive salaries tomorrow.

See how Würk turns compensation benchmarking into a strategic advantage for your business.