PLACING THE PRICE TAG on positions for your staff members can be just as challenging as determining the right price for your products or services
. The payment packages have no fixed rules so as such, typically vary greatly. Among the factors that make these payment packages swing include: industry conventions, geography, job market, seniority, and the background of the candidate. When setting a positions’ salary, it should be carry enough weight to attract top candidates, but not too massive that it eats into your survival or profits. Like most tough business decisions, you’re going to have to hunt for another elusive equilibrium point.
Entrepreneurs should understand that salaries are just bets over time. You can invest in loyalty, training and productivity with the hope that you will gain from the skills the employee acquires in future. Given below is information you will need to determine how much your business should pay.
Determine what you can afford
You will need to do your homework on the amount of cash that you can afford to pay for each position. The biggest thing to keep in mind here is the return on investment (ROI) of the position. Every business needs to analyze its finances and determine what it can pay without straining its budget or profit. The employers should also consider what the law stipulates so that they don’t violate the discrimination law, as well as the value placed on the job. Bottom line--pay the most to people or positions who add the most value to the company. This doesn’t always mean just the people who directly bring in the most money (the sales guys). Running a business is a team effort and teams need leaders. This is why upper management typically makes the most money--they are the ones who run the show and make the most impactful decisions.
Define the job clearly
Establish the qualifications, experience and obligations of the employee. These definitions will allow you to compare the pay rates in the marketplace. The title of the job is not enough when comparing what other businesses have to offer. You will need to define the job with various aspects so that comparing the market rates of the job will be easy. You will need to rate your job at a cost that will match the average market rate.
Study the competition
Determine what other companies or businesses of similar size to yours are offering. Once you identify what other business are paying for the similar job in the market, you will be capable of coming up with a salary that will compete favorably with other businesses. There are many online resources that will help you to learn the pay rates of other businesses.
Determine the salary parameters
Once you know what competing businesses are offering, set the average salary that you would like to give to the employee. You can decide to ask the employee the amount they would like to get, while other employers prefer to ask the employees what they earned in their previous job. In the course of the first interview, the information about salary should always be the last topic covered, and only if you think the potential employee has promise.
Bundle pay perks
Apart from the average amount of money that you will pay out, there are other important things to put into consideration such as quality of life perks. Although it may be offering less cash, your company may have more nibbles on your position offering if it offers more attractive benefits. Exploit things such as flex-time and retirement benefits and you will be surprised to discover that many employees are willing to take the job, despite the salary being less then in other businesses, due to a better quality of life.