The subject of salary is a top concern for potential hires and employers. As a business owner or facilitator of salaries, having a payment scale to reference when determining an employee's compensation allows for smoother fiscal transactions as well as clear communication within an organization. Being able to explain how salaries are determined in relation to a potential hire can make for a desirable employer, which in turn attracts the best talent. The question then becomes, what are the best ways to determine a salary scale for employees?
1. Assess the Position
Before determining a salary scale, it's important to assess the value of the position for which you're going to pay. A helpful starting point can be creating a detailed description of the job that outlines all expected duties and responsibilities, the formal job title, the time commitment, and other pertinent information. After establishing what the position demands, think critically about the value it provides for your business. How much time and energy would you need to do it yourself? What would you expect to be paid? What level of experience and certifications are necessary to get the job done? Assessing the value of the position and the ways in which it will benefit you as an employer can point you in the direction of ideal employees and the best practices for compensating them.
2. Research Wages
A key component to determining a salary scale is offering competitive payment. By researching the median pay for a given position, you can forecast what an employee will expect to make. Researching wages can also indicate whether or not your business will be able to sustain the salary for the position you're seeking to hire, while providing valuable insight about how qualifications, experience levels, and education influence salary. Payscale is an excellent resource for researching salaries, as well as the Glass Door, and both provide information on what competitors are paying for similar positions.
3. Determine a Max and Min
Once you know the value of a position and the median pay, you can figure out your base line and maximum. To be sure that you're creating a sustainable position and employee, you have to be mindful of creating a feasible salary that your business can comfortably support. What is the minimum, ideal amount you would preferably offer for the position? What is the absolute highest you're willing to go? When answering these questions, it's important to consider the employee as an individual. If the potential hire would put you at a disadvantage by working for one of your competitors, he or she is probably worth the maximum salary. If you think you could find another person to fill the position for less, aim more towards the minimum. Setting financial parameters while considering the desirability of the candidate will establish a margin in which you can formulate your offer.
4. Decide How You'll Pay
While payment methods certainly address salary versus hourly or biweekly versus monthly, it also spills over into other ways of rewarding your employees. Finding ways to sweeten the pot for the employee can give you a fair amount of wiggle room in the salary you pay. For example, universities often subsidize a modest salary with tuition remission. If there are ways in which you can compensate employees outside of their salaries, you can stay closer to your base line payment figure. Common employee perks include health insurance, reduced gym memberships, bonuses, stock options, or commission, and they often inspire employees to accept less than they would without such benefits.
5. Be Flexible and Open to Negotiation
Though it can sometimes be uncomfortable, you should expect employees to inquire about their salaries and try to negotiate. Employees who can respectfully assert their worth often demonstrate desirable negotiation and professional qualities that will likely benefit your business. To have employees who routinely perform exceptional work and strive to do their best, it's important that they feel sufficiently compensated for their worth and comfortable discussing their growth. Being flexible during negotiations and meeting the employee halfway will more often than not result in gratitude and appreciation that inspires above average performance and employee loyalty.