When you’re hiring, you’re looking for skilled talent who can help take your company to the next level. And you have to offer enough compensation to attract that top talent. Lowball your offer, and the people you want are certain to choose another firm — especially when the economy remains strong and unemployment is low.
But how can you know how much is enough? You’ll need to figure that out long before you bring up compensation in a candidate interview. Here are tips on determining pay levels:
Consult salary surveys
Rule No. 1 in salary-setting: Make sure you’re paying the same or, preferably more, than your competitors. To find out what this should amount to, you need to research what other organizations pay employees in similar jobs. The Robert Half Salary Guides are excellent resources for this type of information. Robert Half’s guides are based on real-world compensation data, drawn from the temporary and full-time placements our staffing experts make, and include formulas that allow you to adjust compensation for your city.
Don’t forget the other elements of compensation
Top talent expects not just a base salary that’s the same or more than offers they may be getting from other companies but also a competitive choice of benefits, incentives and perks.
Robert Half research shows that the most common benefits at Canadian companies are related to insurance, including medical, dental, life and vision. When it comes to perks, typical ones include flexible scheduling, telecommuting and regular social events. There are more details on benefits, incentives and perks in the Robert Half Salary Guides.
Keep in mind that you shouldn’t offer benefits to make up for a lower salary; they should sweeten what is already an attractive starting salary offer.
Remember that you’re paying people, not positions
Base your pay on the actual technical and soft skills, knowledge and experience workers bring to the company — not just what’s requested in the job posting for the positions they’ll fill. That’s why the Robert Half Salary Guides list average salaries in four percentiles, starting with the least experience on up to significant, highly relevant experience, among other factors.
When it comes time for the salary negotiation, you can base your offer on what each candidate is likely to bring to the job.
Whatever you do, don’t underpay
Obviously, when you set salaries that are too low, you miss out on the top candidates. But there are other consequences, as well. Employees who do come to work for you will be more likely to feel like the business doesn’t value them, which, in turn, could make them less engaged at work and less productive overall.
Underpaying employees often leads to higher turnover, as well: In a Robert Half survey, 39 percent of employees cited inadequate salary or benefits as the main reason to leave a job.
Determining appropriate compensation levels when hiring takes some work, but it’s worth it: You must be prepared to offer a competitive salary if you want to land top candidates — and if you want to keep them happy and productive in the long run.
Continue to adjust salaries
Make sure you’re constantly evaluating and updating your salaries, taking into consideration your firm’s compensation philosophy, the range of other benefits and incentives you offer, and the level of competition for individuals within a particular market.