For every job, there is a salary range, and for every salary range, there are factors (both internal and external) that play into determining that rage. These days, there is also no shortage of online market data which employees can use to bolster their request for a pay increase, come review time. Job title, location, education, years of experience, number of direct reports, performance data, etc. are all data points used to calculate a projected annual salary.
But for some reason, 42% of employers believe they won’t be able to find the right person or talent to fill the open position.
Right-sizing salaries or pay scales is important in ensuring the dollars paid is in line with business goals and hiring or talent acquisition strategies. This is also an essential element in deciding how you plan to financially reward existing employees through bonuses or raises, all while keeping your budget in mind. Going forward, the base salary will be what the employee uses to negotiate a raise. This salary could also be the deciding factor in whether or not new talent joins your organization or if existing top employees make the decision to take their career elsewhere.
Here are our top tips for not only establishing a salary range for a new position but right-sizing existing salary ranges.
Research the Market
One of the best ways to bolster your argument for wanting to make an adjustment to a salary range is to do your due diligence when it comes to refining salary ranges for existing or new positions. You’ll need to take into consideration the location of the employee(s), desired qualifications, skills and experience, and education requirements. Understanding the trends of the market will help build a better picture of whether the pay scales need to increase or decrease.
Salary, Bonus Structure, Employee Benefits, or Everything
A regular monthly salary is only one part of a typical compensation package. In addition to an employee’s salary, they will want to see a strong offering of employee benefits and understand what their bonus structure looks like (if in a position that is regularly accompanied by a monthly, quarterly, or annual bonus). For example, 55% of employees would accept a position at a different company for a more robust benefits package, even if the compensation was lower. If you’re able to offer a more robust employee benefits package, this may compensate for a lower than the median slot on your pay scale. If a bonus structure is included with the new role, make sure to call this out and reference it willingly.
Your organization, similar to the larger industry, should work to benchmark job descriptions and associated salaries. In addition to keeping your open positions competitive in the market in terms of financial compensation, it is important to understand the rate of turnover and how the pay scale may need to be adjusted. Appropriately ranged pay scales can not only help reduce turnover but can help acquire top talent who can be retained for the long-term.
When it comes to discussing an employee’s pay or making changes to existing pay scales, it is important to remain sensitive and cognizant of how the changes may impact employee lives. There is a delicate balance between maintaining or improving salary structures and continuing to motivate and drive employee productivity and success. Fortunately, this is where we thrive. Contact Insured Solutions to learn more.