Employees are amongst the most important resources in any business, and hiring and retaining the right talent is challenging in any job market. After figuring out the skill set that the prospective employee brings with him or her, deciding what to pay is probably one of the most difficult decisions to make in the hiring process.
If your organization does not already have established pay scales in place, the easiest way to determine a fair pay packet is to look at what competitors are paying for a similar job. It is important here to compare apples to apples, and get as accurate a job description as possible when comparing.
The decision gets much more difficult when you are unable to establish the “going rate” or indeed unable to meet it.
In these circumstances, it becomes imperative to make this decision yourself based on a few criteria.
- Budget: The most important criteria when deciding how much to pay an employee is the budget you can set aside for this. When taking a decision on this it is important to also take the long term implications into consideration. Will you be able to afford the bonus or pay hike that may come up in the future?
- Job Description: It is important to define as exactly as possible what the job description and responsibilities are. Sometimes a small budget and a lower salary may be off-set with other considerations, like flexi-timings or a challenging enjoyable job, at other times you may find that one person may have the skill set and ability to do the job of two, allowing you to pay extra to retain that person.
- Staffing right: Be sure that you hire only as much staff as you need. There may be redundancies inbuilt into certain jobs; sometimes you may be better off hiring part time or temporary employees. Over staffing will eat into your budget and make it difficult to offer the right employee the right package.
- Company practice: It is important to review company practice and keep pay for new hires in line with what you pay older more experienced employees.
- Legality: Make sure you do not run afoul of the government norms of pay or discrimination in the work place.
Setting salaries is one of the most complex aspects of hiring. Looking at the job from the employees’ point of view is helpful as you may be able to come up with out of the box, creative solutions to hiring and keeping staff.