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Money Talks: 5 Strategies to Ensure You’ve Set a Competitive Salary

You think you’ve found the perfect candidate for the job. This person checks all the boxes, even seeming like a perfect fit for your company’s culture. But when you decide to extend an offer, a counter offer comes back — a counter that’s $10,000 more than was posted.

When a potential hire asks for more than the advertised wage, most employers go into negotiation mode. They start to weigh whether to risk losing a performer over what amounts to a few hundred more dollars a month.

Not that you shouldn’t negotiate pay. People want to feel as if they’ve hammered out a deal for what they’re really worth. But you should also take this negotiation as an opportunity to look at your pay scale and if it’s actually competitive with the market.

That then leads us to the question of the hour, what’s the best way to determine whether you’ve set a competitive salary for the job?

1. Find the median wage.

Before you can even think of setting a competitive salary, you’ll want to determine the median wage for the position — “median” being the operative word here. Median will give you a clearer picture of what people will expect to make, as it’s the midway mark between the highest and lowest salaries.

Determining median wage will also tell you whether your organization can actually afford to hire for the position and how experience, education, and qualifications might influence pay. Our team has access to salary reports and compensation surveys. Just ask and we’ll be more than happy to provide data specific to the positions you’re trying to fill.   

2. Understand your market.

Most employers typically establish their pay practices based on comparable jobs at comparable companies. Pay attention to trends not just in your industry but region. Both Payscale and Glassdoor are excellent resources, but you can also use the Bureau of Labor Statistics to research salaries by state and job characteristics.

What’s more, companies in areas with higher costs of living must set salaries higher to both attract and retain talent — extending even into service sector jobs.  Sure, the pay for these jobs will remain low in comparison to those offered to the more skilled workforce, but still higher than the “average” service worker.

Related: 5 Tips for Filling a Position — Fast

3. Evaluate the position.

After identifying median wage and market factors, the next step is often to gauge the value of the position in question. Value being relative, it’ll require you to create a job description beyond its formal title. Outline the expected skills, background, and experience, as well as duties, responsibilities, time commitment, etc.

With this information in hand, think about how much time and energy the role will demand in your organization and the ways in which the person’s contributions will benefit business. Obviously, the greater the benefit, the higher the value will be. And salaries should be at least commensurate with this value.  

4. Decide how you’ll compensate.

Money is only a portion of any competitive compensation package. You’ll also need to find other ways to sweeten the pot for employees. Some of the most common “perks” include health insurance, bonuses, stock options, and commissions, but you may get more mileage out of gym memberships, tuition reimbursement, unlimited PTO, or parental leave beyond what’s required by law.

Offering employees more than a paycheck can often give you a bit more wiggle room when setting salaries. In fact, some of the most sought-after talent will accept less pay for these sorts of fringe benefits. For example, 76 percent of Millennials would take a three percent pay cut if the employer offered flexible office hours.

Related: 16 Ways to Show Employee Appreciation Without Breaking the Bank

5. Benchmark salaries.

“Benchmarking” is the process of comparing internal job descriptions with external jobs of similar responsibilities to ensure salary is competitive with the market rate. This is especially important for any position with a high risk of turnover. Benchmark salaries at least once a year to not just attract and retain talent but maintain employee satisfaction and morale.

After all, the cost set aside to pay for turnover and training can often be allocated to fund your competitive salary if you set salaries competitively from the start. The majority of those turnover and training funds are no longer needed when you’re able to retain talent over the long term.

If you’d like to learn more about how to set a competitive salary, or need help recruiting a position, please let our team know today. We’d be more than happy to schedule a meeting to discuss your options. 

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