As a hiring manager, you know that your company or department needs new employees. That comes down to the thorny question you need to answer: what should you pay for each worker? Must you stick to what the market pays for their specialized key skills and experience even though your budget had not factored that? Or should you pay what your company can afford, whether that means the possibility of losing that key hire? Can you use stock options?
It’s important first of all to remember that the goal is attracting good talent and paying them at fair rates. Understanding that the market for good talent is a competitive one, you should not pay more for a job than it is worth to your company.
Therefore, the starting point should be to decide on the top amount you would be ready and willing to pay. This should be guided by the value the prospective employee brings to the organization.
1. Establish the scale bottom
The next important step is figuring out the least amount to pay. This is where the market steps in to assist, as the going rates are what set the expectation of the candidates. The market at times under-prices value, while it may overprice value at other times. Whichever way, the potentials will be expecting that you’ll at least pay the rates set by the market, unless you are offering several attractive perks or alternatives.
Some good sources of pay scale information would be other business owners as they could share with you their experiences. You could get in touch with the area chamber of commerce, or a business networking group to swap information on salary data.
Ultimately, what you pay out will be a blend of the market demands and the job worth.
2. Deciding on payment method
Once you’ve found the worth of the job and the candidate expectations, it’s time to decide on the payroll method. Are you going to offer an hourly pay or fixed salary? Although the choice is yours to make, a widespread notion among workers is that specific positions pay in certain ways.
Typically, salary-based types of jobs are for the management class and other white-collar posts while hourly pay is ideal consultants, temps and certain group of blue-collar jobs.
Next, depending on your specific industry, you may consult your lawyer to ensure that what you are planning is legal. Some jobs for instance have legal restrictions or minimum wage limits. In addition, Trade Unions could also have a say in terms of contracts requiring overtime or particular wage levels.
Another option is paying through commission. A good category to pay via this method is salespeople.
3. Adopt some little flexibility
Having established what you are going to pay, the market expectations and the method of payment, you must be ready to be extremely flexible if you're engaging upper level management staff or senior executives.
The reason is that when it comes to these levels of staff, the guidelines get rather fuzzy. Senior executives often receive a complex blend of salary, bonuses and stock, set by a complicated prevailing practices and market rates.
As an expert in hiring, you need to break the market rules as everything here is negotiable. If you are keen on getting them on board, flexibility is a must. You need to craft a deal that has short-term salary, performance-based business targets and stock as well as long-term bonuses.
Finally, understand that you get greater levels of flexibility if the thinking is taken beyond mere money. Nowadays, lots of people place more value on things rather than cash payouts. You could offer rich non-financial rewards that will draw in right workers and hook them in completely. Examples include flexible working hours, more time off, casual dress, telecommuting, and creative or impressive titles in lieu of simple cash reflected on the payroll. Professional development and training also matter.