Setting the Right Salary: Hold onto Talent without Breaking Your Budget

September 8th, 2011

The right level of compensation for a certain job will typically be based on two sets of factors: Those that vary with the job market, season, and level of company need, and those that do not vary and typically hold steady regardless of these changing circumstances.

First, address the non-variable factors by researching average salary rates for this position in your geographic area. Review recent survey data and check in with the Bureau of Labor Statistics. This can help you to gain a sense of the expectations that potential candidates will carry based on their education and previous experience.

Once you have a general salary range in hand, find out where your company is positioned within your industry. Then determine how well this particular job is positioned among similar jobs in other industries. Use these two factors to further narrow down the salary range that can be applied to your candidate pool.

At this point in the salary determination process, it will be wise to remember that the higher you can move to the top of your range, the more likely you will be to attract the best available talent. Salary plays a powerful role in the decision-making process for candidates, especially those who are already in possession of more than one offer.

Your ability to adjust your compensation package to include items beyond salary may become a determining factor in your negotiation. Your budget may not allow you to offer a better salary than a competing company, but make sure you explore and exploit every resource available in terms of insurance benefits, retirement options, bonus opportunities and incentive-based or merit-based compensation.

The use of incentive based compensation can also mitigate your financial risk. In spite of his or her track record, there’s no clear way to gauge how well an employee will perform, how long she’ll stay, or what kind of return she’ll provide on the company’s investment in her growth and training. Offering incentive-based pay can reduce the upfront cost of hiring a candidate and can help retain employees who are motivated to perform. A hiring bonus may convince a candidate to accept an offer, but an incentive delivered a year or six months into her employment can encourage her to stay for the long term.

For more tips on positioning yourself for the best salary contact the Palmer Group for more information!