Determining how much to pay staff is a really important decision as an employer. Your approach to pay, the systems you use, your pay policy, or lack thereof, can create a world of headaches for you or make building a great business easier. We offer some salary determination tips for recruiter pay strategies, outlining the most outdated approaches.
Most employers don’t know where to begin and other employers are going through the motions of an outdated process. What’s worse is that employers miss out on the fun of building a dynamic comp plan once you get past the compliance efforts and baseline requirements set by the government. If you're doing any of these following things, you might need to overhaul your approach to pay:
Using job title for salary determination
Job titles are relevant in two ways: to tell someone what you do and to tell someone your power and decision-making ability. Those two factors are not mathematically equivalent to earning potential. Stop using this as a starting point to determine pay in your company wage strategy.
Arbitrary job descriptions
Most job descriptions today fall short of truly scoping. In fact, some of them seem to be an act of creative writing skills more than a technical document. We've used this method for 40 years and it isn’t working. This is evident by turn over, low job satisfaction and employee satisfaction in employer surveys. Scope means to outline what you want to be done. If you don’t start the relationship with accurate expectations, how you can think it will be successful?
When someone in Compensation spends a lot of time and expense to create a compensation strategy, they will ask you to start with a scope. The scope is used as a data point to search for like descriptions and then apply like wages. You can do this for hourly and salaried jobs in your company. Go off the beaten path and scope your jobs better and test to see if you get better results.
Banding is a term to describe putting like roles into like buckets and creating wage (min and max) for each role within the band. It’s a process that says, "I wrote the job descriptions similarly, so they should be paid similarly." Ask employees what happens to their motivation to work smarter and harder for the vision of the company when they learn that a slacker is paid the same as them? This answer isn’t new by any means and isn't effective, so why would you keep allowing that in your company? People who work like it when pay reflects effort.
Think smarter about your basis for salary determination and enhance your wage strategy. Consider pay that encourages performance, ability, tenure, skills, and goals.
Searching for your salaries
Type “average wage for…..” into your search engine and you will get whatever data that has been scraped and shared and bought for those words and the result will tell you a number. You need to be wiser than your search. Wages should reflect a combination of factors.
Using a broker or consultant
For when you don’t have the time but have the money, you outsource your comp strategy. If you have the time and have the money – do your business a favor and create a comp policy on your own. The process, resources, and data that a consultant has available is available to everyone. A consultant will ask you to scope out what you want for every role, look into a database for like-titled roles and then assign a like value based on historical market data.
You don’t want a comp plan based on history, do you? Salary determination needs to be relevant. Most people want to combine best practices, trends and what’s best for the business.
Using faulty or irrelevant data
Don’t recreate the wheel and don’t use hacked and scraped data that may not be sound when determining your company's salaries. Consider the Department of Labor. It's an oldy but a goodie. Use this for baseline and minimum standards. The DOL and ADP have had a long-standing data partnership. Go to the source and build from there.
I understand as an employer you don’t want to put your compensation strategy out for public view or for your competitors. Your comp strategy has historically been part of a strategic advantage. For the next generation of talent in our digital era, competitors already know what you do and employees know what each other makes. Income is a conversation, and it should be. If you have a solid philosophy, be fearless about defending it. If you measure pay on the non-subjective, you should be proud.
High pay may be what get quality candidates and future talent in the door but it isn’t what makes people stick. Tell a total employer picture and you’ll attract the talent you want.
Summary: Think smarter when determining salaries
If any of these tips for salary determination apply to you or if you're in need of a solid compensation plan, take our advice - get into the new era of work. The old school methods served us in the past and now we need to pass the baton and advance our working world.
At pepelwerk, we offer a modern solution for recruiters - an all-in-one recruitment and HR platform for matching employers to talent, in a relevant, targeted and streamlined way. Our online hiring system uses AI to carry out laser-focused skills matching to help companies find quality candidates, without having to trawl through piles of resumes. We're the matchmakers of the working world.
Create a free pepelwerk Employer account and see for yourself how easy it can be to find, connect with and manage the talent you need to grow your business.