17 Apr Employer Extra: Show me the money?
When hiring new staff members for your growing business, important questions to ask are:
What skills do I need?
How much experience am I looking for?
What about education?
In addition, perhaps most importantly, how much should I pay?
Setting the right salary is crucial for the growth and success of your business. Pay too much and you may hurt your bottom line. Pay too little and you may only draw applicants who lack the skills and abilities you really need. So how do you find the right balance that will land candidates who’ll increase company profits and productivity and keep you competitive with other employers in your field?
The first step is to see what others are paying for similar positions. Begin with a well-written job description that clearly defines the roles and responsibilities of the employee. Then, as you look at what other companies are paying, you can make accurate comparisons. Examining the going rate for a specific job title is not sufficient, as responsibilities may vary greatly from one company to the next.
A good resource for developing and comparing job descriptions is O*NET OnLine. O*NET is the nation’s primary source of occupational information, developed by the U.S. Department of Labor. The O*NET database contains information on hundreds of standardized and occupation-specific descriptors. It’s available at no cost and is continually updated by surveying a broad range of workers from each occupation. The database forms the heart of O*NET OnLine, which serves as an interactive application for exploring and searching occupations.
Once you’ve developed a clear-cut job description, the next step is to start looking at what other employers are offering their employees. Start by looking at current job postings on any of the online job boards. In conducting your research, approach these listings as a candidate would. The search options in NCWorks Online will allow you to explore current job postings and determine salary ranges. NCWorks Online uses the spidering technology made popular by Indeed.com and includes direct postings by area businesses.
Another way to determine what local employers are paying is through networking at business events and trade shows. You can speak to other employers, representatives of employment agencies, members of your local chamber of commerce or others who may be doing the job elsewhere.
Once you’ve finalized the job description and researched the market, the last step is to determine your compensation range. Analyze your current pay practices. What are you paying people in similar positions? What benefits can you offer and how will a new employee’s salary affect those costs? What kind of return on investment (and when?) might you expect of this new employee?
You’ll also find extensive labor market information in NCWorks Online. Bureau of Labor Statistics data provides current trends on occupations in your local geographic area, including salary ranges. If the range for the particular position for which you’re hiring is broad, you’ll need to narrow it down. Considerations include a candidate’s levels of education and experience and the size of your business. Smaller businesses tend to be on the lower end of the scale because they typically have smaller margins for error when it comes to payroll and cash flow.
After considering all these factors, you may discover that you can’t quite afford a new employee at this time. If that’s the case, you may be interested in taking advantage of On-The-Job Training (OJT) Grants to cover part of the costs of hiring and training a new employee. Learn how here.
When you’ve determined your estimated compensation range, you’ll make an offer within that range based on the candidate’s experience, education and those intangibles and “value-adds” he brings to the position. Be prepared to negotiate within your range in the event that he chooses to opt out of benefits you offer.
Now you’re ready to recruit! NCWorks Online offers free job-listing functionality and allows you to search its large database of job-seekers at no extra cost. You may also recruit and create a talent pipeline through multiple low-cost avenues: your businesses’ website, networking and outreach through existing staff members.
Should you publish the salary range to job-seekers when listing your job? Many employers choose to withhold this information; however, this may result in the withdrawal of a number of applicants after you’ve invested time and energy in considering them. If you’ve set a firm salary range, it may be best to let potential candidates know what it is up front. Keep in mind, of course, that your existing staff members and competitors will also be aware of your salary range.
Adding a new staff member to your growing business is both an exciting and scary proposition. One employer recently likened it to having a new baby. One way to alleviate some of the fear is to be confident that you’ve done your research and established a compensation level for your new staff member who will continue to drive positive business results.