Whether you’re a business owner looking to hire or a worker hunting for a job, one word is at the top of your mind: salary. For employers, compensation comparison can feel a bit intimidating. How do you know if you’re offering the right salary? And how do you keep your employees’ salaries correct down the road?
Let’s take a look at some best practices for compensation comparison and determining compensation for employees.
What’s the best way to determine the salary of my employees?
In this article, we’re going to discuss 5 best practices for compensation comparison and salary determination.
- Determine the value of the position.
- Research mean pay rates in your industry.
- Set a pay range.
- Consider perks and benefits.
- Stay flexible.
Determine the Value of the Position
Hopefully, you already have a detailed job description for the position. (If not, then you might want to complete that step first– here’s a post to help.) Think about variables such as:
- Job title
- Hours of work per week
- Travel involved
- Level of education and experience required
- Remember to be truthful and include the good and the bad
Now consider how much time and energy it will take to do the job. What would you expect to be paid for that? Also think about the value that this position brings to your organization. Will this person have a basic skill set, or is this specialized work that your firm can’t live without?
Research Mean Pay Rates in Your Industry
You want to be competitive. You can only attract the best employees if you pay at least as much as other businesses in your industry. You also want to know that you’re paying your employees fairly, and that you’re not overpaying them.
Research the median pay for each position in your firm. You can use that information to predict what salary a new recruit will expect. It should also give you a good idea of how an employee’s experience, education level, and other qualifications affect salaries across the industry.
To do this, use software with reliable and statistically significant data. Make sure it takes into consideration your field, the size of your company, the benchmarks of similar companies, and the details of the role.
Set a Pay Range
Now that you know the median salary for your position, you should be able to determine a minimum and maximum that your company is willing to offer. Of course, it’s important that your pay range is feasible as well. If you offer a salary that you can just barely afford, you may not be able to sustain that position in the future.
Ask yourself: What is the minimum amount that a candidate is likely to accept? What is the maximum amount that I can afford to pay comfortably? There’s your pay range.
Consider Perks and Benefits
Usually, the base salary will be the most significant component of your compensation package. But you may have other perks that could sweeten the deal for a potential hire. Think beyond the common benefits like health insurance and retirement accounts. Can you offer tuition reimbursement? An employee discount? Many employers offer attractive benefits and perks that make their workplace attractive to employees.
Depending on your personality type, you may love or hate haggling. But regardless of your feelings on the subject, you should expect new hires and even existing employees to try to negotiate their salaries. This is actually a positive characteristic. When employees know their worth and confidently negotiate on their own behalf, that means they are capable of doing the same for your company.
It’s important for employers to remain flexible during these negotiations. Don’t give more than your can afford, but do try to compromise when you can. It will go a long way toward improving your relationships with your staff.
Though compensation comparison can feel a bit intimidating to some employers, it doesn’t have to be. Use these best practices so that you can feel confident that you are offering the right salary to attract the best employees.