When it’s time to make an employee an offer, you’ll want to make sure your compensation package is at least comparable to what your competitors are paying. It’s so easy these days for candidates to look up the salary range for their job. If what you offer lacks value, you may have gone through the hiring process for nothing.
What can companies do to ensure they’re setting salaries that will bring in the best talent?
1) Ask a recruiter what the most recent hire in a similar position was offered.
2) Offer a fixed salary based upon the company’s budget for the position.
3) Look at compensation data from a broad range of sources, such as the Bureau of Labor Statistics, Salary.com, PayScale.com,survey reports from HR consulting firms that may cost thousands of dollars.
What’s the downside of these approaches? If you ask only one or two recruiters for their experience, you may not get broad enough information to make a truly educated decision about the value of the position.
If you set a fixed salary for a hire, with the attitude of “We’ll get the best person we can at this price,” you may end up paying too much, or you may find somebody who turns out to be underqualified.
The most practical approach is based on research, involving at a minimum, hundreds of subjects. Salary surveys from blue-chip consulting firms don’t come cheap though. Websites like Salary.com provide sufficient assistance for many small to midsized firms.
Some experts say that optimal compensation for a given job can’t be determined out of context. The needs and realities of a specific employer should be considered. If you want to hire a top-ranked individual, you might feel pressure to increase the salary range out of your comfort zone. Be careful of making a job offer to a star candidate that’s significantly above what current employees at the same level are earning.
Even after you’ve hired someone, it’s important to keep salaries up to date. Make sure you reassess pay structures regularly and keep an eye on annual pay surveys to remain competitive.
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