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The salary landscape has gotten a bit murky since the pandemic fueled remote work. How has this affected efforts to pay a fair market wage? What steps should companies take to ensure salary practices are competitive and appropriate to attract top talent? What sources of information should they turn to to assess the competitiveness of their wage practices? What used to work that no longer works?
Here we explore those questions and offer some advice for employers operating in an increasingly competitive talent market.
It all starts with your salary philosophy
All employers have a salary philosophy, whether they have made it clear or not. In short, are your payment practices leading, lagging, or in line with the market? There is no inherent right or wrong in any of these philosophies. Of course, different results are to be expected.
See also: What leaders can offer to retain and develop employees
For example, taking on a leadership role can make your company more attractive to job applicants, but cause you to overspend to attract talent. Conversely, if you lag behind the market, you might find it more difficult to find qualified employees who will stay on board long-term.
Conduct job analysis and update job descriptions
Your compensation approach should support and align with your organization’s strategic goals. Based on these goals, you would then rate the different roles in your organization to determine how well they contribute to contributing to or driving the company’s goals. For example, a salesperson in a B2B sales organization is likely to contribute more than an invoice clerk in the same organization. All positions are important; Conducting a workplace analysis is simply one way to find out relative Importance of the different jobs you are hiring for.
It is also important to ensure that job descriptions remain up to date. As skill requirements change and new technologies emerge, the way jobs are performed changes, and with it the relative value of those jobs.
Identify benchmark jobs
Smaller organizations may only have a handful of jobs that need to be evaluated. However, in larger organizations, there can be hundreds of jobs and accompanying job descriptions. In these organizations, benchmark jobs are used as a point of comparison.
These may be positions that are most prevalent in your company, positions that are difficult to fill, or positions that are selected based on other criteria that make them important in maintaining competitive pay rates. Generally, they would represent the higher-paying jobs, since other jobs within the organization would have set salaries relative to those positions.
Determine the market you will be recruiting from
Some positions – for example retail clerk or bank clerk – are likely to be recruited in a local market. Other positions, such as web developers or C-suite executives, are likely to be recruited from a much broader regional, state, national, or even international market.
The pandemic experience has had a significant impact here. Before March 2020, many companies may have said that a significant portion of their workforce must be from a relatively local market. However, now we have all learned that many jobs across the country or the world can be done remotely.
Determine salary ranges for the positions you will be evaluating
When determining market-based salary ranges, companies need to research what other organizations are paying for similar positions. This information may come from professional organizations, surveys conducted by compensation consultants, or other sources.
Salary surveys, which used to be a go-to source for relevant and reliable salary information, no longer have as much impact for a number of reasons. First, these surveys tended to be delayed by a year or two, meaning the data is likely no longer accurate or up-to-date in a rapidly changing market.
See also: Employees now have the upper hand. How should companies react?
Additionally, the impact of the pandemic and a sudden increase in remote or hybrid work have complicated the salary landscape. Because of these shifts, some companies are taking a national or international approach to setting wage rates. This would mean that an employee working remotely from a small town in Montana would be paid less than an employee working remotely in Manhattan due to differences in the cost of living. (I’ve seen Google do this.)
An important first step in determining if pay is competitive is to observe the competitors. Your job posting, listing or ad may include salary information. In some states and locations, pay transparency is becoming a requirement. For example, effective May 15, New York City will require employers to include salary ranges in job postings.
Glassdoor, Indeed, and PayScale are popular services for getting data on salary and compensation trends. While sources like this are populated with contributions from collaborators, they may not be as reliable as other sources can Provide what your applicants are likely to look at when they do their own research on what they’re worth. LinkedIn Salary is another source of information on salary ranges that prospective employees often turn to.
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The duration of the vacancy may play a role. As with the sale of a house, the actual demand received can be very telling. If you get a lot of interest in open positions very quickly, you may be ahead of the market; Conversely, if your job openings are open for a long time, you may be offering a below-market salary.
An ongoing process
The bottom line is that money is important, but not that just thing that is important to employees. Be creative in creating a compensation and benefits package that provides value to employees, and openly communicate the value of that package and the other amenities your company provides.
Assessing competitive pay is not a one-off event. This is an ongoing process that should be repeated and updated regularly, especially in a constantly evolving global economy.
https://www.entrepreneur.com/article/422072 How to measure the value of your employees