How to Know if the Salary You Are Offering is CompetitiveNatalia Persin
One of the most difficult parts of the hiring process is ensuring that you are offering a competitive salary. Most job seekers often interview with several different companies before they are offered a position, which means a variety of salary offers as well.
If you find a candidate you wish to hire, you need to ensure that what you offer them when it comes to salary is competitive. Doing so will help them to choose your company over others when making a decision.
Wondering how to know if the salary you are offering is competitive? Keep reading to find out.
What is a Competitive Salary?
A competitive salary is an idea that a company will offer a pay scale that is either higher or equal to other companies within the same industry. This often means that for specific positions, candidates should receive offers that are similar to each other for the same job type.
When a company is actively recruiting for a new position, they need to ensure that they are willing to pay them a competitive salary. To do this, business owners and managers need to make sure that they have done their research concerning the appropriate pay scale for various positions.
Why is it Important to Offer a Competitive Salary?
Paying a competitive salary is essential for companies that want to attract and retain high-quality employees. When business owners and managers are looking for the best candidates to fill a position, they need to offer both benefits and salaries that will make them attractive.
While larger companies can typically afford to pay a higher salary to candidates, small businesses need to also be as competitive. This can sometimes hurt small businesses, which will have to sacrifice in other areas just to attract better candidates.
The Benefits of Offering a Competitive Salary
For businesses who want to not only stay competitive in the job market but also grow their business to new heights, they will need to offer candidates higher wages. When they do this, the benefits far outweigh the expenses that they are out for in the competitive salary range.
If you are curious about the various benefits that offering a competitive salary can provide, keep reading below.
Reduces the Turnover Rate
One of the biggest reasons turnover happens within a company is oftentimes due directly to the salary they are paid. Whether they have started at a lower pay rate than they deserve or do not receive deserved raises, employees soon tire of lower wages.
When this happens, they will often seek out other companies and begin inquiring about competitive salaries in their industry. If they find that other companies are willing to pay more, they will often leave their current position.
However, if you choose to pay your employees a competitive salary from the beginning, they will often feel a sense of loyalty to your company. This is because although passion and experience play a part in why people stay in a specific industry, pay is often the driving force behind it.
Attracts a More Qualified Talent Pool
As you begin looking for either a replacement or a candidate to fill a new position within your company, it can be overwhelming. This is especially true when the talent pool is so shallow that you cannot find just the right person for the job.
When you are a company that has a reputation for offering a competitive salary, you will often begin to attract highly qualified candidates. This means that you will have your pick of talented candidates that you can choose from.
Shows Employees That They are Valued
Whether you are looking for a new employee or trying to retain current employees, a competitive salary can help you. When you show that you value employees by paying them what they are worth instead of a set scale, they often feel more valued.
Employees who feel valued will often work ten times harder for you than those who feel they are underpaid. This is often because they feel a sense of loyalty for someone willing to show them that they are worth much more than just a minimum salary.
How Do You Know if the Salary You Are Offering is Competitive?
You may be wondering if the salary you are offering to candidates and employees is as competitive as it should be. Keep in mind that if you are not offering a competitive salary, you may lose valuable candidates and employees to companies who are willing to pay a better wage.
Wondering what you should do to make sure you are offering a competitive salary? Read on below to learn more.
Do Your Research
Before you start the process of interviewing, you will need to make sure you have done your research. This will help you make sure that the salary you plan to offer is in line with what other companies are offering for the same position.
To do this, you must first make sure that you have outlined a job description that is specific to what you need. From there, you can research on reputable websites the salary ranges that are typically offered for the position you are looking for.
Keep in mind that it may be difficult to know exactly what your competitors may be offering their candidates, but some websites will give you an idea. Once you have taken the time to get a range, you should be able to offer candidates a salary range that they will find attractive.
Take Experience Into Consideration
Another way to ensure that you are offering a competitive salary is to take into consideration the experience that the candidate has. The last thing you want to do is insult an individual who has more experience than others by offering them the same small amount of money.
This is why when you are figuring out the salary range for the position you are looking to hire, you should consider what they bring to the table. This will help you to make sure that you have some leverage with candidates of all experience levels.
Once again, this is where doing your research will come in handy to help you to find the appropriate range to offer candidates. Not all potential employees come with the same qualifications, which is why it is important to be willing to take experience into account.
Consider the Benefits That You Offer
Most business owners and managers know that other benefits count as a part of a complete compensation package. This is something that you will need to also consider when you are setting the salary range for candidates.
For some companies, taking a look at not only the salary offered, but various benefits that come with the job are an important factor. Since benefits offer employees more than just another salary, it is important to consider it.
Keep in mind that employees are not only looking for a higher salary, but also benefits that are designed to give them a better work-life balance. Because of this, you should research the types of benefits that are offered in the industry in which you work.
Learn What the Median Salaries Are For the Position You Are Offering
When you are doing your research on the various salary ranges, it is important to take a look at the median salaries especially. This is because by doing this, you can see whether or not your company will be able to come close to the pay range.
If the median salary is more than what your company can afford, it may mean that you need to adjust your job description and expectations for certain positions. The median salary also gives you a better understanding of where you should start on the salary you may want to offer.
Determine What Your Company Can Afford to Pay
As you are creating the job description of the position you want to fill, you may want to take into consideration what you can afford to pay. Keep in mind that if you are looking for someone with high qualifications, you will need to be willing to pay a much higher salary.
You do have to remember, however, that there is a fine line between what you can afford and what you want to pay. If you want quality employees, then you must be willing to pay a bit extra for them.
Steps to Ensure The Salary You Are Offering is Competitive
Once you are ready to start making sure that you are paying a competitive salary, there are certain steps you need to take. Following these steps can help you to attract the right people to the positions you are looking to hire.
Read below for the steps you should take to ensure that the salary you are offering is competitive.
Step 1: Develop a Job Description
One of the first steps in determining a competitive salary is to outline what is expected of the person in the position. While you may have a specific job title in mind, you also need to create a detailed job description.
These details will tell you just how much is expected of the person in the position you are hiring for. Additionally, once you have an idea of what is expected, you should be able to decide whether it is worth paying someone more or less.
Step 2: Research the Pay Scale
After you have narrowed down your job description, you should be able to then decide where to look for research on the pay scale itself. Keep in mind that most pay scale models are based on general job descriptions and can be modified for your scope of yours.
Many sites on the internet will provide you with examples of various pay scales for job titles. You will need to dig a bit deeper into those positions to determine whether or not they fit with the description you have outlined.
Step 3: Consider the Location
Another factor and the next step in the process of setting your pay scale is to consider the location in which the job will take place. This is because the cost of living in one area may be somewhat different in other locations.
For example, if you are looking at research done that shows pay scales for a position in an area that has a high cost of living, but you are located in a rural area, the scale may not be aligned as well. When you do your research, you should make sure that you are comparing not only positions but also locations as well.
Step 4: Determine the Pay Scale to Include Raises
How you set the pay range for a specific position will determine the type of raises you will be able to offer down the road. If you want to have room to give your employees a decent raise down the road, this should be a consideration when determining the pay range of a position.
This also means that as you are considering a salary for a specific position, you will need to also outline a policy for giving raises. This will help you down the road as you communicate your intentions to your employees.
Step 5: Take Regular Inventory
One thing you will want to do once you have set a specific salary range for a position in your company is to do a benchmark regularly. This allows you to check out the market to determine whether or not you are still offering a competitive salary.
This step is ongoing and should be done at least annually to make sure you are considering any cost of living adjustments that need to be made.
Is the Salary You are Offering Competitive?
The bottom line when it comes to determining whether or not you are offering a competitive salary range is to ensure that you have done your research. One way to do this is to make sure that you know what the current trends are in the hiring process within your industry and make them work for your company.