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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