Salary Review: How to Know What to Pay
Determining what to pay a prospective employee can be a tough decision. If you offer too little, the best candidate might walk away; if you offer too much you will have an employee who is starting at the top of what your company can comfortably pay.
When determining what a salary should be, there are certain kinds of information you need to have in hand. Obtaining a business management degree online can sometimes help you as well, as they cover this topic in curriculum. The best way to determine what to pay is by going through the following steps.
- Understand what the job entails. Define the position as clearly and fully as possible. Be very specific about what the job requirements are and what responsibilities that person may have. Write a job description that fully reflects what you expect this person to be able to do. Be specific about what education level and experience you expect this candidate to have.
- Make sure you understand how your company has paid in the past. This can be very important when making new hires. If you have someone in a similar position be sure to know what they are being paid, what their level of education is and how much experience they brought to the job.
- Consider budgeting for new hires. There are situations where your company may need another employee or one with special skills, but the question is: “Can the company afford this new hire?” Budgeting for new hires and additional help is crucial to the process.
- Know what the competition is paying. This can be difficult, but online sources can at least give you a range. Belonging to industry groups is another way to get an idea of what others are being paid for the job you are offering. It is very important to be careful about titles when comparing salaries. For example, a marketing director’s salary can vary widely depending on the size of the company and the responsibilities of the position. Be sure you are comparing two similar jobs not just titles. Another factor to look at when gathering information from other companies is their size. If you know the salary of a position at another company but the company is much larger or smaller you will need to adjust.
Making Your Offer
Once you’ve gathered the above information, you can determine the salary range your company can offer. By knowing what the job entails, what the company can afford and what similar jobs are paying, you can set a range of pay in which you can negotiate with candidates.
Put together a package of pay and benefits that is appealing to the individual. You may be able to pay less if your company can offer good benefits or a generous vacation package. Another option to consider is flex time or telecommuting. This can make the offer more attractive to some candidates.
Get It On Paper
When you have decided what the package will entail, it is best to put it in writing, listing out the pay, vacation, sick, retirement, flextime, etc. An offer letter that contains all of the specifics about a job will eliminate a lot of misunderstanding later and ensure that everyone understands what the offer is.
Along with this information it is important to budget for the future. If you hire someone at the top of your range there is no room for a raise.
It takes effort to find the correct amount to pay a prospective employee. Too little and your candidate might leave; too much and they could become complacent.
With the correct research, a company can determine a fair rate of pay that will attract qualified candidates.