Ontario Municipal Human Resources Association

In today’s job market and economy, municipalities need to ensure that they are offering competitive and equitable compensation packages to both prospective and current employees while also adhering to their budgets. To determine whether a compensation package is competitive, municipalities should regularly assess their employee compensation packages against those provided by other relevant employers – including those in the private sector. This assessment includes salary benchmarking and benefits planning.

What is Salary Benchmarking?

Salary benchmarking is a method for determining the salary rate for positions within your organization by comparing them to similar roles in the job market.

Benefits of Salary Benchmarking

Attracting Top Talent: In 2026, there is a growing expectation amongst job seekers that employers will be transparent with job salaries and that their salary will match those of similar roles in their job market. Many employees will come to a job interview armed with their own data on, and an offered salary that does not meet that expectation can result in a rejection. By doing salary benchmarking, municipalities can help reduce the amounts of rejected offers they receive.

Maintaining A Good Reputation: Word amongst interviewees and employees moves fast. Even when a prospective employee rejects an offer, it is important that they leave the hiring process with a positive view of the municipality’s compensation package so that the municipality does not get a reputation for offering undesirable compensation, thus deterring individuals from applying.

Leadership Confidence: Salary benchmarking can help municipalities feel confident that they are providing defensible salaries that are supported by data and reduce fears that their offers are based on guesswork. This not only attracts top talent and maintains a good reputation amongst future candidates but also allows leadership to balance the desire to provide a competitive salary with the municipality’s budgets and limitations.

Identifying Internal Issues: Salary benchmarking is not just about attracting new talent, it can also help municipalities promote competitive salaries for their internal employees and identify issues such as outdated pay structures, salaries that have fallen behind the current market value and gaps in payment based on gender.

Changing Job Market: The job market changes quickly, which can cause changes in salary expectations. This can be caused by things like changes to the economy, new trends and technology (e.g. remote work and AI), shifts in demographics, such as the current aging workforce, and general labour fluctuations, amongst other factors. These changes can happen fast, so municipalities should engage in salary benchmarking often.

Comparing Roles

Comparing roles is not as simple as a one-to-one comparison between identical job titles in the closest neighbouring municipality. Finding comparable roles should include a broadened scope that considers similar daily job duties, responsibilities, levels and scopes of authority and required qualifications, education and experience. When comparing against other municipalities, consideration should be given to the geography and population size of the municipality and the operating budget. Municipalities should also compare against private sector roles to reflect the reality that prospective employees may be looking at both public and private opportunities, while also appreciating the unique benefits posed by working for a municipality.

Data Sources

Data for the comparator groups can be obtained from various sources, such as job postings, compensation databases, contacting salary benchmarking consultants, taking advantage of professional networks and associations, and government or industry surveys, publications and reports.

Benefits Planning

Benefits are becoming an increasingly important aspect of an employee’s compensation package. Just like with salary benchmarking, municipalities should be paying attention and comparing their benefit plans to those of comparable roles to determined what is standard and expected. Municipalities should be looking at trends of which sub-groups of benefits are important to different groups, as opposed to others. For example, some roles may show an increase in benefits relating to Accidental Death and Dismemberment Insurance. Others may show an increase in benefits relating to fertility support. Care and consideration should be given to the employees’ real lives and their demographics and what benefits are most meaningful to them.

Conclusion

Salary benchmarking and benefits planning are important tools to ensure that compensation is equitable, consistent and competitive. Municipalities should take steps to determine comparator groups across the organization, determine what needs and limitations the organization has, review a variety of market data, and update employee compensation packages on a regular basis.

Written by: Hayley Smith of Turnpenney Milne LLP