Companies establish salaries and salary ranges based on data and research results provided by their human resource professionals. Many smaller companies engage HR consulting firms to assist them with this challenging task. Though dozens of factors can come into play in setting salaries, several drive the compensation strategies of most companies and industries.
The Society for Human Resource Management (SHRM) says a compensation strategy commonly includes the company’s financial position, organization size, business objectives, salary survey data, recruiting difficulty and unique aspects of the business. These factors will determine salary levels in most situations.
A compensation strategy (or philosophy) to attract, motivate, reward and retain employees should be applied consistently and equitably across the organization. Such strategies need to be reviewed and modified from time to time, particularly in the wake of company or industry changes or recruitment challenges for some specialized positions.
Here are a few “must know” tips as you establish new positions and salaries and review existing ones:
- Know your market. Get data about competitive salaries within your market and within those where you are recruiting. (Here at the TriStarr recruiting and staffing agency, we can supply the objective data you need.)
- Know your candidates. Be aware of who the active (seekers) and passive (non-seekers) candidates are in your recruitment pool, and what it will take to recruit them. (Again, TriStarr can provide this information.)
- Know that what you want to pay and what the market requires may differ. You may meet with some surprises, so prepare to adjust your expectations.
Just as you are evaluating candidates, they are evaluating you. Do you want your offer to be higher than the market, match it or be lower but with better benefits? (The latter is often the case with nonprofits.) Be able to explain to candidates the basis of your offer. If it is well under or over the market salary level, why is that?
According to the SHRM, three out of four companies use a market-pricing approach with current salary survey data to design and adjust salary range structures (listing jobs and salary ranges throughout the organization). Most companies with formal salary range structures say they review them annually.
If you would like help with researching and setting salaries, or with finding, interviewing and assessing candidates, I hope you will talk with us here at TriStarr, a Lancaster, PA recruitment agency and HR consulting firm. With more than 60 combined years of experience in recruiting and administrative temp staffing services, we find the candidates who are a great fit almost every time.
We back our recruiting with our Good People Guarantee. If a TriStarr client isn’t pleased with a professional we have recruited, our guarantee takes effect. Our recruiters (aka headhunters) will replace the person with another candidate at no cost or provide an agreed-upon, prorated refund. We can confidently make that pledge because, even though good people can be hard to find, our skills and processes lead us to the “right-fit” candidate almost every time.