How to decide how much to pay your employees
Working out salaries when you're a new company can be a real
pickle. On the one hand, you want to attract the best talent
possible by offering a salary that outshines all other potential
employers - but on the other, you need to be constantly vigilant
about keeping costs as low as possible. What to do? Well, for a
start, you can read this guide:
- Work out what you can afford
- Assess the position and the market
- Gauge the demand
- Talk to the experts
Work out what you can afford
This might sound obvious, but you'd be surprised at how many
businesses advertise jobs at a certain salary, only to find out a
few months down the line that they can no longer afford the new
employee. Plan ahead. Don't just look at this year's financial
forecast when you're budgeting for a new employee - consider market
trends and how much income you approximately expect over the next
few years. Also remember to take account of additional expenditure
such as expenses and any in-office provision that a new employee
will require (which may include computer, food, more electricity
used, equipment, desk, tools, and so on), as well as the cost of
any training they will need.
- Work out how much income you can roughly expect over the next
few years
- Take account of additional expenditure such as expenses,
provisions and training
Assess the position and the market
Obviously a job that requires specialised skills is going to be
higher paid than one that only needs a basic understanding of
what's going on. But to figure out just how much it costs for
certain skill sets, check the job pages of trade magazines and
websites to get a feel for what the going rate is for certain skill
levels. If the role doesn't require any qualifications, experience
or skill sets, it will probably be close to minimum wage.
- Check trade magazine and website job pages to assess the value
of skill sets
- A job that requires no qualifications, experience or skill sets
will be close to minimum wage
Gauge the demand
You don't necessarily need to advertise the salary when you
advertise the job. It can be a lot more effective to get a sense of
how in-demand the position you're offering is before naming your
price. If you get 20+ people applying for the position, you can
offer a slightly lower salary than if you only get a few responses
- since if your number one choice turns the role down, you're more
certain to find someone who will accept the position on your terms.
This also gives you the chance to ask candidates how much they
expect to be paid when you interview them, and you can work out the
salary you want to offer from there on.
- Advertising the job before deciding on salary help you assess
how in-demand the position is
- The allows you to adjust the salary accordingly
- Asking candidates what they expect to be paid allows you to
work out pay
Talk to the experts
Finally, ask for help. You can start by putting the question of
salary to the Smarta network for your sector, or to Smarta
contacts. If you're still not sure, and particularly if you expect
it to be a high-salary job, you might want to consider getting
advice from an employment agency. It's a bit sneaky, but you might
be able to get away with having a quick consultation with them
before having to commit to a full-blown full-price recruitment
scheme with them.
- Consult the Smarta network for your sector
- Consider consulting an agency
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