When it’s time to make an employee an offer, it’s important 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. Therefore, 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? Learning how to calculate market value will improve your hiring process.
Typical Approaches:
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, and survey reports from HR consulting firms that may cost thousands of dollars.
What are the downsides to 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. Also, if you set a fixed salary with the strategy of hiring the best person for that price. you may end up paying too much. On the other hand, you might also feel pressure to increase the salary range when hiring a top candidate.
Meaningful Data
Research is the most practical approach to setting a salary. However, salary surveys from blue-chip consulting firms can be expensive. On the other hand, websites like Salary.com provide sufficient assistance for many small to mid sized firms.
One Warning
Some experts say that the market value for a given job can’t be determined out of context. Learning the needs and realities of a specific employer is essential. It’s important to keep salaries up to date even after you fill the position in order to reassess pay structures regularly and keep an eye on annual pay surveys to remain competitive.
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