![]() Inequitable salary rates within a company – both positive and negative – are likely to be perceived by employees as unfair, causing pay dissatisfaction. This means determining whether there are some employees with salary rates that are disproportionate, more or less, and inconsistent with your company’s overall relationship to the market across all jobs. This will allow you strike a balance between providing attractive salary increases to employees for promotional opportunities and maintaining an affordable salary practice. It’s important to determine the desired compensable leverage for your company. Define compensable leverage for your companyĬompensable leverage refers to how much more or less salary rate increases in your company, overall, compared to the market rate increase for higher-paid positions in the organizational hierarchy.įor example, when employees are promoted to a higher position within your organization, will they receive an increase in salary rate that is similar to, greater than (i.e., higher leverage) or less than (i.e., lower leverage) the rate increase provided, on average, in the market? Do you need to pay lower-than-market level because that’s all your company can afford?ģ. ![]() Do you want to pay at a higher-than-market level to attract more quality candidates?.Do you need to pay at a higher-than-market level so to retain your current employees?.Are the salary rates for your employees currently above, below or comparable to the rates of your competitors? You should decide what competitive posture is in the best interest of your company. The competitive posture of a company is its overall salary level compared to market average (i.e., median) across the benchmark jobs. Consider your company’s competitive posture You can extract the market rate data and analyze it based on simple comparisons – the dollar and percentage differences between what employees are paid at your company and what the market rates are for similar positions – and more advanced statistical procedures. Once you have identified the benchmark jobs that “match” (i.e., have similar duties and responsibilities) to the positions in your organization. The surveys cover “benchmark jobs.” These are common jobs in the market where duties and responsibilities are generally defined. There are a variety of commercially–available salary survey sources that provide salary information for various positions and different industries. Take a look at market pricing – what other companies are paying for similar jobs. The first thing you should do is figure out the value of each position in your organization. Establish value for each position in your company If you’re considering creating a salary structure, here are a few tips to help you get started. Not to mention, it can help you retain your current employees, as well as make your recruiting, hiring and promoting efforts more focused and easier to execute. Having a solid salary structure makes it easier to manage your salary expenditure.
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