Deciding on wages for staff is liable to cause a mild panic in most new business owners – you don’t want them to feel undervalued, but equally you want to minimise the burden on the business.
Here’s the secret: it’s not actually that bad.
Setting your workers’ salary might take a bit of thought, but it’s certainly not the difficult process many business owners seem to think it is.
Don’t believe us? We’ll show you.
Finding the top end
The first step in determining salary is simple – what do you need? The answer is, almost certainly, a capable and talented employee. You’re looking, essentially, for a person who brings value to your company.
And you can use that goal to work out salary, as well: the largest amount you’re willing to pay is equal to the amount of value you feel that person brings to your company.
This is easy to work out with some positions, but harder with others. Salespeople, for instance, can have their salary easily quantified relative to the revenue they bring in. Support staff, on the other hand, provide value by saving you money – consider the IT person who helps configure your network.
The beauty of this method is that it can actually show you where you’re over-paying. If the value you place on a job is lower than a person’s salary, then you might need to re-think whether you need the position at all.
This also helps with hiring, letting you quickly cull candidates who are asking too much. Just be careful that you don’t cull all your options, a sure sign that you’re either undervaluing a job – or you should just do it yourself.
Finding the bottom end of your wage scale is arguably easier than finding the top: just look it up.
Yes, it’s now easy to find industry wide and location specific salary data online, making it a snap to find out the basic salary rage for any position you’re interested in filling.
That said, it’s absolutely worth double-checking that figure. The way to go about that process is by talking to other business owners – they have to deal with the same problem as you, after all.
A good way to do this is to join a local business network. Not only will it help you determine your market rate, it’ll provide a wealth of useful connections that can be tapped down the line.
Putting it together
You’ve likely figured this out by now, but by looking at the two figures we’ve worked out, you now have everything you need to evaluate potential employees and their salary requirement.
By taking a little bit of time and working out what is valuable to you, and what is valuable to the people you’re hiring, you’re able to find the middle ground that will satisfy you both.