5 Things You Must Know About New Hire Salaries

May 18 2015

Lesson Two in a Series to Help You Hire

Setting salaries is a lot like going to the grocery store to buy salad dressing. Store brand Ranch can get the job done—flavor the iceberg lettuce and look the part. But often the more you pay, the richer the outcome. More expensive dressings have a higher content of the “good stuff” (read: sour cream). Sometimes you need it—like when your mother in law is visiting. Other times, you don’t—like when the Little League team comes over for a BBQ. The same thing is true of salaries. Experience, track record, and certifications/degrees are like sour cream. Sometimes they’re worth the price and other times they’re not.

So do you fall into the budget trap? Do you ever have this discussion: “Let’s hire a new Accounting Clerk. What should we pay? Well, we budgeted $35k. Let’s pay $35k.” When the resumes “in your price range” come back, you are disappointed in the quality. Your recruiter has already talked to many qualified people but told them they’re not candidates due to salary. Then it’s back to the drawing board.  Your budget has absolutely nothing to do with what good candidates command in salary.  If you need to pay less than market rates, it’s critically important to eliminate some elements from your requirements (e.g., education or certifications) so that you drop the cost of your new hire into your budgeted range.

The old adage is that you get what you pay for. This is especially true in hiring. Figuring out what to pay is a tricky subject surrounded by a lot of urban legends like, “Don’t talk salary until they’re hooked on the job.” Or, “Offer less than you want to pay and see if they can negotiate.”  Good people are very hesitant to leave good jobs, so they are increasingly demanding about salary.  Develop a strategy that works for you, get some expert advice, and ignore the urban legends.  If you’re “real” about money, your candidates will appreciate it and open up about what they need from you.

Smart employers know what the market rate is for their jobs. They know what they can afford, but they also get educated about what the person that they really want will command in the marketplace. They find great salary data and use it to set budgets and recruiting expectations.

Bottom line? Get educated on what the different salary levels are for the job you want to fill. Know what your “sour cream” items are. Decide if they’re worth it and, if so, what you’re willing to pay. Participate in industry salary surveys where you get the results as a reward for participating. Consider buying salary surveys from other sources. Recognize that paying what you have budgeted may not get you where you need to be long term. Understand what it takes to hire who you want and be prepared to pay when it makes business sense for you.

Ask us questions about setting salaries and getting salary data by accessing our free expertise, available via chat or phone—just click on the orange button at the bottom of your screen.  We are passionate about helping growth companies hire and love to share what we know!

Special Note about Paying Sales People: Lots of our clients are hiring salespeople right now. Good salespeople are coin operated and like to “win” by getting paid more. Beware of any salesperson who will even consider your job if you can’t share a very specific commission plan that they can aspire to earn. And know what your competitors pay for great salespeople—these are the people you want.

Coming Soon…

Lesson Three: Do I Have a Good Reputation as an Employer?   How Do I Know?


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