A good salary is definitely one of the best ways to attract talented people and keep them on board. Although it is not the only tactic, it plays a big role. Paying too little will definitely make it hard to attract and keep the right talent on board. However, paying too much is not good for your business. At the end of the day, every role must make business sense to you so the salary scale is determined by how much value it is bringing. It is a purely business transaction but it should also not hurt your ability to attract and retain the right employees.
According to a market insights report by BrighterMonday and Data Fintech, job seekers are interested in the salary scale the positions attract when evaluating the suitability of a job. On the other hand, the pay scales for certain positions have been rising over the years, and this is something that employers should be aware of.
So, how do you go about setting the right salary scale?
Determine the Value of the Position
While it is easy to determine the value of some positions based on the income they generate, this can be relatively hard for others. For example, a sales position can be measured relative to the direct revenue it generates but this is much harder for administrative positions. However, both positions are important to the business, as the sales position would not perform well without the administrative position. To determine the importance of a position, determine what it would cost not to have the position.
Research the market rates for different positions
One factor that determines the mobility of employees is the current pay rate in the market. If your rates are lower than the average market rates, then employees will simply use your company as a launching pad to better pay. It goes without saying that your turnover will be high and this will only raise your recruitment costs.
Compensate well for Credentials, Tenure of Service and Experience
The more experience and credentials a person has, the more they should be compensated. If for example, a person comes into the company with an undergraduate degree but completes a master’s degree in the course of their duty, it is important to compensate them for additional qualifications, especially if this translates into improved performance. Moreover, if a person has been in the company for a long time, it is important to appreciate their loyalty and compensate them according to market rates.
Bear in Mind the Rates of Inflation
As economic changes take place, the salaries of your employees are affected as the buying power of the money they have is lowered. Therefore, what may have been the industry’s standards a few years ago may not suffice at the current rates of inflation.
At the end of the day, you want to have the best talent on board and keep it. Therefore, you need to have the best salary scale in addition to other factors which promote employee retention.