Money isn't everything to your employees, but it is an important factor in job satisfaction. Competitive employee salaries can keep your employees happy, reduce turnover and create corporate stability — but how do you set them? With a little research into industry trends and local standards, you can choose a pay scale that's both fair and sustainable.
Do Your Research
Before you set employee salaries, do a little digging to find out what other companies are paying. Local job boards are a great place to start. Find positions with similar responsibilities at companies in your industry. Each time you find one, make a note of the published salary. This gives you an idea of the going rate. Salary surveys can also be useful. Industry trade publications often publish their own, or you can check the Bureau of Labor Statistics wage data. Keep in mind that cost of living plays a big role. If you're running a small company in rural Nebraska, you probably won't be paying the same employee salaries as a company in New York City.
Create a Pay Scale
Once you understand industry standards, it's time to create a pay scale. Start with the entry level — what do you plan to pay employees with the minimum level of education and experience? Give yourself some wiggle room by choosing a salary range rather than a fixed number. From there, you can set employee salaries for more advanced workers. Once you have this framework, create a schedule for promotions, raises and bonuses. Depending on your business, you might use factors such as length of employment or sales figures as milestones. A solid structure eliminates guesswork on your part. When a new employee comes in, you can simply reference the scale. It's also equitable and transparent, so it helps you avoid accidental pay discrimination. Keep in mind that this scale is likely to change as your company grows.
Talk to Your Accountant
Once you have your salary ranges and pay scale, it's a good idea to run them by your accountant. Using financials and sales projections, he can decide whether or not your employee salaries are reasonable. Together, you can make a hiring plan. You might decide to bring on a new employee when your sales hit a certain milestone, or choose to keep the team small in order to pay fairly. While you're at it, figure out what kinds of perks you can use to sweeten the pot. Things like gym memberships, theater tickets and flex time can boost job satisfaction without increasing salaries.
Setting employee salaries is one of the most important things you do as a business owner. By doing your research and making sure your numbers are sustainable, you can create a pay scale that's satisfactory for everyone involved.
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