Benchmark your wage cost without paying for data

At some point the question comes up: am I paying too much? And right behind it the realization that you have no idea, because you have nothing to compare against.

There are companies that sell you that comparison. Sometimes it is worth the money. But before you go there, you can get further with what is already lying around than most people think.

Start with your sector agreement

Your sector has pay scales set by collective agreement and they are public. That is your hard floor and also your first check: are you above it, and by how much.

That sounds trivial and it is not. In plenty of smaller companies, individual arrangements were made over the years that were never revisited. Lay your actual wages next to the scales per role and per seniority level and you usually spot a few positions where the gap is much larger than anyone intended. Not necessarily wrong, but good to know.

The supplementary sector arrangements belong in there too. Meal vouchers, the year-end bonus, the bicycle allowance, eco vouchers. Those often sit outside your mental picture of wage cost while they are very much part of the actual cost.

What you get from publicly filed accounts

This is the most underused source there is. Belgian companies file their annual accounts and anyone can request them, including a staff section listing average headcount and personnel cost. How much of this is public varies a lot by country, so check what is available where you operate.

Find five to ten companies that look like you. Same sector, comparable size, ideally a comparable region. For each one, divide personnel cost by the average number of full-time equivalents. Then you have a cost per FTE per company and you can see where you sit in that range.

Is that precise? No. The mix of roles differs, white collar and blue collar weigh differently, and a company with a lot of part-time work distorts the picture. But if your cost per FTE sits twenty percent above the median of your group, you know enough to keep digging.

What an external benchmark does add

Staying honest: there are things you will not find out this way.

What a specific role is worth in the market, for instance. A filed annual account gives you an average across an entire company, not a price for an accountant with five years of experience in Vlaams-Brabant. If you are hiring in a tight market and you want to know whether your offer is competitive, role-specific data is worth something.

The same goes for the ratio between fixed and variable pay, and for benefits that are not visible in the personnel cost line.

My rule: buy benchmark data when you have a concrete decision to make that depends on more than the price of the report. Do not buy it to confirm a gut feeling.

What you have to measure yourself regardless

However you compare, one figure has to come out of your own house: wage cost against what gets produced with it.

In retail that is wage cost as a percentage of gross profit per location. In a services business it is wage cost per billable hour. In production it is wage cost per unit. Which figure exactly depends on your business, but the idea is always the same: a wage cost on its own means nothing, a wage cost against output means something.

Plotting that figure across three years teaches you more than any external benchmark. Because the question is rarely whether you pay more than the neighbors. The question is whether what you pay stays in proportion to what it brings in.

The trap in that comparison

Make sure you compare yourself with yourself in a fair way. If you compare wage cost per location and one location has a team with a lot of seniority and the other does not, you are measuring seniority and not efficiency.

So correct for it, or at the very least compare consciously, knowing it is in there. Seniority is worth tracking separately anyway, because a team that stays stable gets more expensive every year without anyone joining it. That belongs in the picture before you draw conclusions about who works efficiently.

How to start

Three steps, in this order. Lay your actual wages next to your pay scales per role. Build your cost per FTE and put it next to a handful of filed accounts from your sector. Plot your wage cost against your output over three years.

That is an afternoon of work and it costs you nothing beyond requesting those accounts. If something comes out of it that you do not understand, only then does it make sense to buy external data on top.

The claim

The most expensive benchmark is the one you buy before you have looked at what you can get for free. And the comparison that matters most is still the one with yourself, three years ago.