The recruitment of an additional staff member is not always the easiest thing to do; there are a number of important elements that need to be considered before you can be confident that you’ve got the right person for the position. These things will of course include the skills, qualities, and experience levels of the individual candidates; however, before a company can even get to that stage, they have to have given some thought as to how much the position will be worth. So, how to answer that nagging managerial question: how much should I pay my employees?
A large number of businesses will admit to having difficulties in this area of the recruitment process; it would appear that the salary issue is one that is shared by a great many managers across all industries.
Potential Job Retention Issues
Before setting the salary level, it should perhaps be noted that it can have a bearing on the overall hiring process, so a couple of areas that should be given worthy consideration are:
- Hiring – When a potential applicant feels that the salary level is not where it should be, then it is unlikely that they will even bother to apply. The company could well be running the risk of missing out on many high quality applicants this way.
- Retention – Setting the salary level too low might also force the new employee to consider his or her options. This might result in them leaving the company if they feel that they are not being compensated at a fair rate.
Losing a person after what seemed like a successful recruitment can be a bitter pill to swallow, not only does the organization need to find a replacement, they will also be faced with a potential loss of revenue whilst this process occurs. Entering into a constant merry-go-round of recruitment is not a healthy proposition for most businesses, with the somewhat inevitability of salary levels having to increase as a result of trying to attract the best people.
This vicious circle is a very difficult one to break away from for many companies; however, most of the time you can avoid this issue altogether simply by understanding the correct amount to pay your employees.
Make it Relative
One of the best ways to avoid issues with the hiring and retention areas is to make sure that the salary package actually relates to the vacancy that you wish to fill. This might sound straightforward, but there are still a lot of organizations that fall down in this most basic of elements.
The way to ensure that this doesn’t happen is to define the exact function of the job. Once the full job description is written up it can easily be compared to others that are in the marketplace. Avoiding the mistake of just comparing job titles will help to prevent what could be a calamitous error. Imagine for a moment that you are looking to hire a sales director. Salary levels for this type of position can range from $60,000 to $400,000 and beyond. However, by comparing the exact job functions you will be in the best possible place to set the correct salary level.
The best hiring managers for example won’t wait around until the interview stage arrives; these people have already usually taken a look at their own business practices and budgets. This will give the opportunity to keep the salary level broadly in line with other employees who fulfill similar roles, while at the same time, factoring in the overall budgeting of the business.
Compare with Other Companies
It is also possible to make a check on what other similar sized companies or even competitors are paying for this type of role. PayScale provides one of the online services for this for example. This will ensure that you have a handle on whether or not your salary proposition is competitive with others, and the information gained can also help to improve staff retention levels.
Are They Really Worth it?
There are of course specialist companies that can provide useful help and expertise in this area; yours truly (ClearFit) being one such example! We have been able to help many businesses avoid some of the pitfalls of knowing just how much to pay a new employee. Part of the reason for our success in this area is our patented hiring success profiles that can help you truly understand if the potential employee is worth the salary that they are asking for.
Not Just about the Money
More and more people are looking at the overall salary package — rather than just the monthly take home pay — favoring jobs that provide additional benefits. A classic example of this might be the opportunity to allow for a flexible working week, ideal for families with childcare concerns. This can have a positive impact on helping to attract the best applicants, without necessarily incurring any additional salary costs on the part of the employer.
One of the worst mistakes that businesses can make when hiring is allowing themselves to be in a position of having to react to what a person wants, before they know what they should be paying for the role in the first place. In this situation you simply won’t have a benchmark to judge whether the individual represents good value or not.
Given that the vast majority of successful companies have a low staff turnover rate, the importance of setting the correct salary levels to not only attract, but also keep valuable employees should never be underestimated. This is why knowing the answer to “how much should I pay my employees?” is vital to the success of most hiring campaigns, with a satisfied worker going on to demonstrate a much higher level of motivation.
Further Resources Online
Here are a few free online resources you can also use to help you determine a fair wage for your employees:
- PayScale: compare average salaries for various positions
- Salary.com: have a look at the “Salary Wizard”
- CareerOneStop: click on each occupation profile to see average salaries
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