Establishing a salary for a position in your company is an important step for any employer. When learning how to set a salary, however, it involves more than stamping an arbitrary number onto payroll. Follow these tips regarding how to set a salary for a certain role or candidate.
How To Set A Salary
First, it’s important to remember that once you arrive at a reasonable salary figure, it will cost you around twice as much as that number. Insurance, benefits and other aspects of the job will factor in to that doubled figure. Thus, you’ll first need to decide how much you can afford to even spend on the role.
Where is the candidate in his or her career?
For the more senior-level hires, or for older candidates, you may be more likely to hire them over someone fresh out of college. You might also pay the more experienced worker a higher salary (or opt for the less experienced candidate, and pay him or her a lower salary).
What’s turnover like in that role?
When you routinely hire on new people for the same role, you have to consider paying people better to decrease turnover in that position. If someone new has joined the team in that same role three or four times over the last year and a half, the pay and benefits are most likely not enough to make it an attractive job. Why have people left the role so quickly? Figure that out—and your next step is making up for it in the next salary package you offer for the position.
How vital to the company is his or her work?
If you’re filling a role that doesn’t contribute a huge amount of income for the company, you have to decide the value of that job. Looking at the largest and smallest contributors to company productivity, you can determine where that candidate might fit. For instance, in some offices, the receptionist receives better pay than most of his or her coworkers simply because the receptionist is the face of the company when greeting customers.
Is it a competitive salary?
Any competitor companies are paying their workers for the exact same work as at your office. If you are only giving your employees a mere percentage of what their counterparts are making elsewhere, it will be hard to recruit top-quality candidates for your own company. One way to tackle this issue is to deliver 10% extra benefits for paying your employees 90% of what they could be making at a competitor. This method helps render your salary competitive. By the same token, your benefits package might be slightly smaller, but accompanied by a higher salary. There has to be an enticing catch for prospective employees.
How negotiable is the salary?
When hiring employees who aren’t in unions, you might not be signing a specific contract. You’ll have flexibility (as well as room for negotiating) with their salary. If you are hiring on employees who are part of a union, you are essentially instructed what you have to pay them. This may limit the number of positions you can logically fill. In addition, it may also determine the time length of the contract to which you agree. For instance, you might only be able to afford a certain valuable role for a year or two, tops.
Are there any extra perks that come with the position?
You might be recruiting workers that don’t need to commute to and from the office each day. Because they are saving gas money, you should factor this into their compensation. You might pay a worker more money if he or she is driving to and from work every day. Likewise, employees who have to travel often for the job should receive a higher salary, be given more days off and have a travel expense account. These kinds of bonus offers increase the total you pay them, but the salary has to be fair if the worker accepts the position.