Salary decisions are not to be taken lightly especially in today’s economy. As an entrepreneur, you’re always caught between having to not just pay your staff but pay what’s good. The million-dollar question remains, what is a good salary? How do you know what a good salary is? Am I capable of paying for it and so on? Here is everything you need to know about making the best wage decision that will give you an edge in today’s market.
If you want to recruit and retain elite talent, you must give them attractive rates. At the same time, you don’t want to lose money by paying exorbitant wages. Follow these four recommendations for choosing the correct compensation for new staff to strike a fair balance.
Set a range for how much an employee in each position should be paid to establish the right compensation for each employee. Where each employee fits inside that range will be determined by your expectations for that individual as well as their previous work experience.
Although determining wages for brand-new positions may need more effort and time, once you’ve created what is a good salary range, you’ll be able to utilize it as a starting point for employing more people for the same or comparable responsibilities.
What is a good salary?
Deciding on a good salary scale for your employees requires time and effort. This is because you want to pay your employees just enough to bring out the best talent in them. Salary payment is also part of company expenses and so as a business owner or entrepreneur, you want to strike a balance between underpayment and overpayment. Paying wages is like two sides of a coin, if you underpay your workers, you don’t get the best services from them and if you overpay, your company might go under.
A good salary should reflect the worker’s skill set and expertise at best while keeping your company finances out of jeopardy. Think of salary payment as an investment as much as it’s part of company expenses. You should ask yourself what returns the said employee would bring to your company? Then assess your business to know if you can hire him/her. Consider these three steps when deciding what is a good salary for your staff:
Do your Research
Deciding what is a good salary requires industry and market research. This is the fundamental step to deciding what salary to pay especially if it’s your first time. As an entrepreneur, you not only compete with others in the market for available customers but available workers. Since workers exist with a variety of skills and experience, you’re always in competition for hiring the best for your venture at a reasonable cost.
Think of this as getting value for your money. That said, you should embark on extensive research to find out what your competitors are paying for a particular talent. Your goal here is to offer competitive prices and give potential workers more reasons to work for you. You can only achieve this when to a reasonable extent you can predict what an employee is likely to accept. By researching wages to know the average, you get to find out if your company will be able to sustain the hire.
To attract and retain top talent, your employee compensation range should be comparable to what other organizations pay for the same role. If you have industry contacts, you might begin by consulting with them.
Examine job postings and career sites (such as Glassdoor, Indeed, and LinkedIn) to determine the national average for that position in your sector. It’s also a good idea to filter your search by location, since this will influence the cost of living and acceptable employee compensation.
Because the cost of living is greater in the city, an employee situated in a major metropolis will most likely be paid more than an employee stationed in a small, rural town. You should also consider the degree of expertise you expect from your new hire, as seasoned experts will command greater wages than entry-level staff.
Set up a salary scale
Every company has a minimum and a maximum salary it can pay. The wage scale is courtesy of reasonable research. Match the wage information gathered from your research, against your business revenue and use it to determine your minimum and maximum payment. You must however keep in mind that the wage scale is also matched per the job description. Top workers earn higher up the scale while the bottom workers earn on the lower side.
Once you know the worth of a position and the median pay, you may calculate your starting and maximum salaries. To ensure that you’re building a long-term role and employee, consider selecting a pay that your company can easily maintain. What is the bare minimum or what is a good salary you would want to provide for the position? What is the utmost limit to which you are willing to go? When answering these questions, keep the employee in mind as an individual.
If the possible hiring would put you at a competitive disadvantage if he or she worked for one of your competitors, he or she is certainly worth the highest wage. If you believe you can find another employee to fill the role for less, strive for the bare minimum. Setting financial parameters while analyzing the candidate’s suitability will provide you with a margin within which to create your offer.
Setup your payment cycle
Salary payment cycle varies from weekly, to biweekly to monthly. Some employers find it easier to pay per hour too. It’s all about proper decision-making. Besides the payment cycles, there are other ways to give your workers good pay for their talent without spending all your revenue on employee wages. This has to do with creating worker’s incentives. Incentivizing causes your workers to put in their best work while still accepting a modest wage because of certain privileges you’ve allowed them. Some such incentives include health insurance, free gym membership, staff awards and bonuses, some percentage discount for staff who patronize the company, etc.
While payment methods cover salary vs. hourly or biweekly vs. monthly, it also extends to additional means of rewarding your personnel. Finding methods to sweeten what is a good salary kind of deal for the employee might provide you some leeway in the wage you pay. Tuition remission, for example, is frequently used by colleges to fund a low-wage job.
You can keep closer to your basic pay amount if you can compensate staff in ways other than their salary. Employee incentives like health insurance, reduced gym memberships, bonuses, stock options, or commissions are common, and they often motivate employees to take less than they would otherwise.
Creating check stubs with Paystubsnow
Once you have decided what to pay your staff, the next most relevant question is whether to get a payroll company to handle your payment and check stub generation. Seeking a payroll company is a great choice for large-scale companies but a money pit for small and medium-scale businesses. Paystubsnow is one of the best alternatives for generating check stubs for almost nothing. If you do not know why your small or medium-size company needs to provide pay stubs, here are 5 reasons why. You can also do so much more with Paystubsnow. These include creating invoices, 1099, and other financial documentation.
FAQS: What salary is good?
The concept of a good salary is different for both employees and employers. This concept is more individualistic for employees as what I consider a good salary for me is likely to be different from what’s considered a good salary for you. On a general scale, a good salary for an employee would take care of living expenses like feeding, housing, transportation, and health. Regardless of how much one earns, the salary earned can be badly damaged by the high cost of living. Thus salaries would also vary according to the general standard 0f living in society.
What should be a good starting salary?
A starting salary is an initial amount you’re willing to pay an employee at the earliest stage of recruitment regardless of experience and expertise. Another way to look at it could be the baseline salary for newbies or the inexperienced workers until they attain mastery. Either way, the general concept behind a starting salary is the propensity for growth.
Does HR decide salary?
The decision-making party of employee wages in an organization depends on the size of the establishment. In smaller companies or startups, salary is usually decided by the business owner or manager. This decision is usually taken after conducting requisite market research and placing it beside budget allocations.