Determining the salary to offer for a position that already exists at your business is fairly straightforward. You look at the salary of the previous person or people in the role, take into account their skills, experience, and other qualities, and work from there.
But what about when you’re hiring for a position that’s totally new to your business? That takes a bit more footwork on your part, but with some effort you can come to a salary range that will help you recruit the right candidate without breaking the bank.
Start with a solid job description.
Yes, this is about setting salaries, not about all the details of hiring. But a good job description is critical to getting salary right. Suppose you need to hire a machinist. But what equipment do they need to know how to use? What certifications are you looking for? What kind of experience is necessary? What shift is the job? How dangerous is the work?
If you don’t know the answers to these questions, you won’t have a good grasp on the kind of salary that this person could reasonably expect. And it’s a bad practice to hire someone without understanding the word they’ll be doing anyway, so make sure you take the time to figure this out.
Take a look at market rates.
Now that you actually know what kind of person you’re looking for, take a peek at who else employs people like this. What kind of salaries are they offering? There are a lot of different sources of information, and you shouldn’t rely on just one. Consider investigating the following:
- Industry magazines and publications
- Job ads
- Employer review sites like Glassdoor
- Career services at relevant educational institutions
- The Bureau of Labor Statistics
- Knowledgeable people in your personal and professional networks
While you’ll see a fair bit of variability in these numbers, they can give you insight into what is expected. This will prevent you from accidentally making a lowball offer and causing good candidates to withdraw their applications as a result.
Consider the value of the role.
So you know what your minimum salary is. But what does your maximum number look like? To know that, you’ll need to put some thought into the value this position will offer your company. You’ve obviously put some thought into this (otherwise you wouldn’t be creating a new position, right?), but if you haven’t really run the numbers yet, it’s time to go deeper.
How much new business could this person reasonably bring in if they’re decent at their job? If they’re truly excellent? Similarly, how much money could this person save your company? Don’t forget to account for things like team morale and peace of mind. Stress reduction can have a huge impact on things like attendance, productivity, and long-term retention.
Put all of it together.
You know the role inside and out. You know what they’ll be expecting as a minimum, and you know what a fantastic hire might be worth to you as a maximum. Right there is your salary range. You may want to squeeze those extremes inward a bit when advertising (especially if you expect people to negotiate a bit), but they’re important for you to know, regardless.
This is a great overview, but what about all the nitty-gritty details?
For more information about salaries for new positions, download How to Set the Perfect Salary. This covers the topic in more detail so you can feel comfortable going through the process of setting salaries on your own.
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