You might think it’s difficult to decide how and how much you should pay your employees. In this article, we will show you how you can set competitive wages and benefits.
A salary range is a range between the numbers that you are willing to pay an employee. Your salary range should be based on topics like skill, potential, experience, education and the position. Let’s explain:
1. The position
Decide the value of the position before you decide how much wage sounds reasonable. You can start off with writing down a detailed job description with responsibilities, time commitment and other expectations. How much time and energy would it cost if you would have to do the work yourself? Imagine you’re the job candidate. How much would you like to receive?
Employee benefits are usually corporate which means they count for all of your employees. Perks like a car, telephone and laptop are based on the job requirements. Your company should decide whether or not they should be included.
2. Competitive wages
Decide what kind of company you are. Are you one of the market leaders with fierce competition looking for the best talent? Your wages should naturally be on the high side in order to stay relevant for candidates. Go to websites like Glassdoor or LinkedIn Salary to get insights into average wages for different positions. Based on your company profile, you can now decide the maximum you want to spend on a new contract. Some companies chose to pay an average salary but with excellent benefits. Think about medical care, extra vacation money, bonuses, and a 13th salary.
After you set a salary range for your company, you can start negotiating about the salary. Make sure to carefully listen to your candidates salary whishes. Keep the economy in mind. In a tight labor market, employees’ wages tend to rise since there are fewer candidates for more positions. The same works the other way around. Watch out for overpaying and underpaying. Overpaying will eventually be bad for your organization since there will be less money available for other new employees. Underpaying can cause your employees to leave your organization since they can feel undervalued. They could end up using the current job as a resting place until they can get a new job earning more money at one of your competitors. Always be very careful upon deciding the ideal wage.
Rewards are all about motivation. As an organization, you want your employees to feel appreciated and motivated so they can reach their full potential. You can motivate your employees both intrinsic and extrinsic. Read our blog ‘What is the best way to reward your employees‘ to gain more knowledge about improving your employees’ motivation by rewards.