Establishing a salary structure on your own is not easy and often requires the help of experienced people. employment assessment legal advisors. But spending the time and money to get it right can really help you in the long run, especially if you’re aiming to grow your business in the months and years to come.
Why do I need a salary structure?
Having a solid salary structure in place helps you allocate the right amount of your budget to pay employees based on their value. Not only will staff members have a better understanding of what they could earn if they progress within your company, but job applicants will be able to make a more informed decision as to whether your company is right for them. . This can make recruiting much smoother and reduce your employee turnover rate.
How to start designing a salary structure
While it’s best to have a professional on your side, here are some of the steps you can take to get started:
Start with job evaluation
Before you even begin to associate a salary with a job, you need to determine how that job is valued within your company. Many employers choose a numerical system to categorize different roles, with senior positions earning the most and apprentices at the very bottom. Of course, these numbers can vary by department, which is why having a good way to organize this data is crucial.
You’ll likely find that some roles end up with the same ranking because they have similar value. In these cases, it is often a good idea to create job families to structure your salary grid. These families don’t need to be in the same department or involve a similar skill set, they just need to have the same kind of value to your business.
Do market research
You want your salaries to be competitive with today’s job market because paying too much or too little could hurt your finances or your ability to find top talent. Although you can negotiate with candidates, you should have a range in mind for each type of role you have in your company. For exceptional candidates who bring a wealth of experience with them, you can adjust this a bit on a case-by-case basis.
Understand your budget
There’s no point in designing a salary structure that doesn’t fit your current budget. While many business owners would love to pay their employees more than their competitors, sometimes that’s just not possible. Be realistic about what you can afford to give your staff and, if that number is less than you would like, you could offer a bounty system it depends on both personal and company performance.
Don’t forget the progress
Most employees will want to be able to progress in their careers and earn more money the longer they work for you. Try to build a progression structure alongside your compensation system to give staff a better understanding of how they can achieve their career goals.
