How To Ensure You’re Offering A Competitive Salary
Offering a competitive salary is a keystone recruitment tactic. Competitive salaries entice top talent, improve engagement, demonstrate you care, and increase retention. It’s only one consideration in how to craft a positive work environment, but it’s an important one.
How do you ensure you’re offering a competitive salary? The following steps will help you answer that question.
1. Determine What The Position Entails
Too often, companies know they want a writer, analyst, or software developer, but they don’t take the time to properly consider what the position will entail or how it will fit into existing workforce structures. If you don’t know the position’s exact parameters, you can’t figure out if the salary is commensurate, let alone competitive.
This step remains important even if you’re trying to appraise a current position’s value. You’ll simply be reevaluating the tasks vis-à-vis the salary, rather than devising from scratch. (We’ll talk about benchmarking below.)
2. Find The Pay Spectrum
Next, you should research the position’s mean wage, its high, and its low. There are many places to find this information. You can purchase pay studies, ask colleagues, or explore data from other firms. Third-party websites like PayScale also provide good data.
We recommend starting with public sources, such as the Bureau of Labor Statistics website. The BLS has loads of data on wages. You can look up almost any position, and research its industry profile, geographic outlook, and mean hourly and annual wages. The data is organized at the state and national level, too.
The BLS’s website also details standard job characteristics, which can help you with step one above.
3. Consider Other Factors
Once you have the pay spectrum, compare it against what your organization can reasonably offer. You may find the mean is either too high or low. For example, companies in major metropolitan cities need to offer more compensation than ones in rural counties simply because the cost of living is that much higher.
If you need data at the local or county level, consider a trip to your state’s department of labor website.
You will also need to consider benefits beyond salary. A salary’s appeal can be greatly boosted by quality health insurance or a robust 401K plan. Even non-monetary perks can make a lower-than-average salary more enticing. Work-life benefits such as flexible schedules, gym memberships, and summer Fridays go a long way.
4. Compare And Contrast
You know the job, its pay spectrum, your local conditions, and ancillary considerations like benefits. Now it’s time to put it all together, compare and contrast the data, and determine the final package.
At this stage, you may discover you want to add to the position’s tasks to get your money’s worth, or reduce the number of tasks to make lower pay more reasonable. You may find the company doesn’t need the position enough to pay a competitive salary and decide to split the tasks among existing staff, while raising their salaries to compensate.
Make these decisions now, rather than trying to backtrack and suffering pushback later.
5. Benchmark Regularly
Benchmarking is the process by which you review internal job descriptions and salary and compare them to positions at other companies. Essentially, you should go through these steps annually for all positions in the company. Benchmarking ensures salary offerings stay competitive against the average. This will curb job-hopping as employees will be less likely to look elsewhere.
These steps are necessary any time you want to add a new position or benchmark an established one. With that said, don’t overemphasize salary. While it’s important, be sure to keep an eye on other quality-of-life improvements, such as work-life balance and a positive company culture. Connecting quality of life with a competitive salary will show your employees you care, and you’ll enjoy the benefits of a happy workforce.