Whether you are paying your employees with a salary or hourly rate, you should research what goes into a compensation package that is best for your business. Not only do you have to decide the amount but also the qualifications, skill set, and value of the position.
For businesses with salary employees, specifically, you must know the legal obligations when hiring new candidates. With hourly rate jobs, you have to determine the nature of the role and if it’s a short-term position.
There are many facets of the compensation package to consider. In this blog, we give three tips on how to set the salary or hourly rate for your employees.
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Determine the Value of the Job Position
How much value does a particular job position provide for your business? For example, if it is a marketing director, you would place it at a higher value than the marketing assistant. Also, it is a leadership role where the employee would have to delegate tasks to their marketing team to complete projects.
Therefore, if you were to lose your marketing director, you would have a loss of efficiency, and all tasks would be redistributed among your team, who may not have the same expertise. These factors should prompt you to pay the marketing director a higher salary.
Research the Market
Now that you know the value of the position, how much exactly should you pay the employee? The best way to know is to research the market and compare similar jobs with other companies in your industry. Find websites that show salary or hourly rate information, qualifications and requirements, employee satisfaction reports, and employee feedback or reviews.
Be careful not to offer too low of pay for a job that requires high-end experience. You will want to understand how qualifications relate to the numbers. This will boost company culture and morale and keep your business going in the long run.
Match the Skills to the Salary
That brings us to the next point – match the skill set to the payment amount. Employees with higher pay are more likely to deliver superior results and work ethic to your business. However, if you do not have the budget for a higher-paying salary or hourly rate, lower your expectations for the position and make it an entry-level position. Then, as the company grows and your employee’s skills grow, you can match them with a higher figure later.
Related Post: The Basics of Payroll
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