When you are a small business owner, it seems as soon as you’ve made one decision, the next one surfaces, and you are back trying to figure out the best thing to do.
One decision business owners are often faced with, and it can be a tough one, is how much to pay employees.
You don’t want to over pay as you’re probably on a budget (and you do need to make money), but you want to pay them what they are worth to keep them with you and happy.
Here are some tips on cracking the code on this … .
Create a range
First off, before any hiring is even done, really before the interviews begin – set a salary range.
Decide on the least you would pay and the most you can pay, and you’ll have some flexibility when it comes to choosing the best candidate and for negotiation purposes.
Look at qualifications
Someone with more relevant degrees, qualifications and experience is usually expecting (and deserving) a higher salary than someone with less.
If you are looking for that highly qualified, experience laden employee, expect to pay for it. If you want someone with a little less experience and education, you can probably get away with lower pay.
Do some comparisons
You can’t really just come up with numbers off the top of your head.
You need to look at some salary comparisons. BUT, you need to look at them as apples to apples. Don’t compare a salary in Chicago to one in Batesville, Arkansas.
Also, don’t just look at job titles, look at job descriptions.
Titles can cover a pretty broad range, but descriptions cover the nitty-gritty, and you can compare just what people are doing to what they are getting paid.
Think about business size.
Sometimes bigger corporations can pay more, but you have things to offer as well, that may not fall under salary. Your company can be more personalized and flexible, offer better benefits or stock options – sometimes that can be worth a lot!
Look around your area and see what other companies your size and in your field are paying employees. You want to stay competitive so qualified people will want to work for you.
When to offer increases
So you have a current employee wanting more moneyÂ
Â Be careful – offering one raise out of the normal standard you have set can set a precedent you can’t afford to follow.
Â Is your employee telling you he or she has an offer for more money? If so, it’s risky all around. If it’s true, it means theyÂre looking and thinking about it. You may need to keep your eye out. If they are worth it, and budget allows, you may need to offer more to have him or her stay, but know it’s risky – they still could leave.
Â If their job descriptions and duties increase, it may be time for more money.
Â The best thing to do is have clear policies with documentation of when raises are awarded. You can go by this and keep it cut and dry.
Â Bonuses and commission are a way around a salary raise. You pay these once and are not committed to them in the future.
No one said running a business is easy. You’ve got employees to keep happy and budgets to adhere to, plus you need to make money.
However, you need to pay your employees fairly or they will go elsewhere.
Photo credit: nbcchicago.com
About the Author: Heather Legg writes on a variety of topics, many related to social media, small business and Bobby Kotick.