By Gillian Hasley, eBusiness Manager, Monster UKIE
Is what you pay competitive in today's job market? If you pay too little, you risk losing valuable employees and attracting only the less desirable in their place. If you pay too much, you're squandering valuable company resources.
Often the best gauge of pay parity is the quality of the applicants you're attracting and another is how high your employee retention rates are. You could also take a look at Monster's Salary Calculator and Career Benchmarking tools to asses where your pay scales sit taking into account industry, region, company size and many other factors. If these reveal you need to fine tune your pay scales, how best to go about it?
The current market
To get the overall picture, you need access to the most up-to-date information about salary, benefits, and bonuses — something which can be obtained by regularly scanning job adverts. The benefit of this method that you can see the full job description, rather than just presuming all job titles carry the same level of responsibility.
Just like many areas of business, employment is a deal done on the basis of supply and demand. The workers with the skills and experience influence supply in the job market, and the companies currently hiring for certain positions influence the demand. How rare an employee's skills are and how much you need them is the fundamental basis for calculating your worth in salary and benefits.
Another approach to determining pay is to structure it to support your company's strategy. This means in effect, you will be prepared to pay higher than market value to attract talent for the jobs your company values most. This is sometimes known as ‘strategic work valuation' and it's probably how you would set about paying staff if you were starting your company from scratch again.
However, before you can assign pay priority you need to reach consensus on what your strategy is and, more problematically, which roles therefore count most.
There are some basic rules when constructing a pay scale.
• Assess each job's content and the contribution it makes to company goals
• Group together jobs that have a similar value
• Count these groups to determine your company's pay ranges.
• Use market information to assign a minimum, mid and maximum amount to each job.
Minimum point salaries are generally given to novices; midpoint to effective, but not outstanding performers and maximum point salaries to the best performers and those who are making the most valuable contribution to your business. Any change in pay should accurately reflect who is performing best and is worthy of development or promotion.
Review your salary ranges annually to ensure they stay in line with your business's success, external markets, and internal pay equity.
Developed effectively, the pay structure recognizes career development in addition to promotion. It demonstrates and pays for the business results on which your organization places value. A transparent, fair and effective pay structure will not only help retain your most valuable staff; it will also attract high calibre job candidates.
That's why it pays, from the outset, to get it right.
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