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Determining salary for employees

Best practices for hiring: Salary setting tips 

So you’re wondering how to hire an employee. You realize it’s time for growth, and you’re ready to get your job post out there in the world. But how do you go about determining the salary for employees? Here are some things to consider when determining a base compensation for your open position.

Consider these questions before determining the salary or salary range for employees

What is the minimum wage for workers in your city?

This seems fairly straightforward but you want to know that you are following the law, especially if you are hiring a seasonal or part-time position. Minimum wages change over time so it’s good housekeeping to keep this research up to date and accurate.

What is the average salary (or hourly pay) for people in this position in the job location?

Paying attention to location is especially important if you are determining salary for employees across multiple locations that span state lines. For example, if you typically post jobs with an hourly pay of $15/hour in New Hampshire, and try to post the same position with the same pay in New York City, it will be hard to get applicants for your job. This is because while $15/hour meets the minimum wage requirement, the cost of living in New York City is substantially higher than rural New Hampshire and thus jobs provide workers with higher wages. If you’re hiring in one state, it’s still good to keep the average salary in mind. In many instances, candidates will do research on the average salary for their ideal job position and you want your job to remain competitive in the market.

How is the economy?

Of course, you need to keep in mind what the economy is doing, and your current and projected finances. What can you afford to pay? If you come to the conclusion that the role you are wanting to fill is too costly in this quarter, it’s worth considering how to hire an employee for a less expensive and advanced roll, and allowing them to grow within your company. When they have enough training and experience, and you have enough cash flow to support growth, you can promote them to a higher salaried role.

What expertise is required?

First and foremost – take a look at the need that you are trying to fill with the open position and make sure that your job description mirrors your needs. Now consider the job seniority that a candidate would need to get the job done. Are they managing one person, a team of people, multiple groups? Are they required to engage in extra projects, community building or large caseloads? The opportunities vary across industries, but one thing remains true, you need to fairly compensate your employees for the extra work that the position will require. Be sure to consider all facets of the job before pricing out a compensation plan.

What about education and skillsets?

Does your position require advanced education, like masters or doctorate degrees? Or are the skills required to do the job rare and sought-after? For many candidates, the work required to succeed in a career began long before your first interview. They will expect to be compensated well for their time and hard work prior to attaining a position. Expect these candidates to negotiate the salary to match what they think they are worth in the long run.

Did you know?

Our smart hiring technology automatically populates the average salary range for employees in similar positions in the job location.


So, how do you actually determine the salary for employees?

  1. After considering the questions above, take a look at your competition. Best practices for hiring and choosing a salary include checking out job listings that are similar to your opening and offering a competitive salary compared to your competition.
  2. Leave room for negotiation. Forecast that most candidates (especially in senior roles) will try to negotiate their salary based on other interviews or their own research. Leave a little wiggle room to ensure that the candidate feels they are getting the best deal. In some cases, determining salary for employees will be a bit of a dance. Don’t get discouraged, just be sure to do your own due-diligence research beforehand!
  3. Launch and adjust. Sometimes you can follow all of the necessary steps and still need to adjust your strategy. Listen to candidate feedback and watch application trends in relation to your compensation offering. If people are continually complaining that the salary is too low, then see if you can adjust the budget to offer something higher, or wait to hire this position until you are in a better financial spot.

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