Do you ever wonder what the right salary is for your open positions? This week we’re diving in to help you determine that and how to do it in three ways that will get you on the right path. Ultimately it’s up to you and your business but we know this is a hard nut to crack and we’re here to help. The three areas we’re going to dive into are the market, company and candidate. There are dozens of factors you can analyze however; these three will give you a good indicator to determining the right salary.
Step #1: The Market
When we look at the market we’re looking at two things, the job market and your company’s geographic location. Let’s start with part A, the job market. Today’s market has 6.7 million job openings and 6.3 million job seekers, which means it’s a candidate’s market. There are more jobs than those out there to fill them and this puts employers, like you, in the position to recruit and pay more aggressively for the best talent. That means your salary and compensation packages need to be in line with, or better than, your competition. Do your research using competitor sites, glassdoor.com, payscale.com, indeed.com and other sites as well as good ol’ fashioned recruiters to find out what they pay and what benefits they offer.
Next up is your geographic market. This you likely already know but remember to pay based on your market. If you’re in San Francisco, LA, NY, Chicago you pay more for talent than Des Moines or Boise. However, cities with growth such as Austin, Nashville, Indianapolis, and Charlotte need to pay more than they did a mere few years ago. If you still pay the salary of 2-3 years ago you’ll lose talent to your competitors.
Step #: Company Size
If you’re a bootstrapped entrepreneurial start-up, research what others are paying in the market for a similar position based on your company size. It makes sense that you won’t be paying the same for a Digital Marketing Specialist in Austin, TX as a Fortune 1000 firm. That said, if you’re that Fortune 1000 firm, you need to pay an according salary and have great benefits too.
These days many candidates are going for more than just salary. It’s about an overall compensation package including sign-on bonus, additional bonuses, growth potential, paid time off, work from home possibilities, professional education opportunities, executive coaching, day care subsidies and more.
Step #3: The Candidate
Now you have your ideal salary range determined based on today’s job market, your company’s geographic location, and your company size. It seems you’re done and then you meet the “perfect candidate” whose salary requirement is $10K above what you determined to be the right salary. Do you lose them over $10K? No. It costs an average of 6-9 months salary to recruit, train and replace an employee. (Source: SHRM) That’s far more than the increase this new candidate is asking for in the salary. Go for it and hire the right candidate. We both know you’ll be much happier!
Now you know how to determine the right salary for your open positions and that it’s worth it to sometimes go above it for the right candidate. Up next is recruiting, interviewing and hiring. Turn to our blog for more help on that too.