When setting salaries for new positions at your business, it can be tempting to just pick up a salary guide for whatever job title you are running with and go with whatever range they recommend. And salary guides can be one source of information about salary ranges (although they’re increasingly being found to be unreliable).
Unfortunately, they’re not a comprehensive source of information, and they won’t help you gain a better understanding of how to set salaries in the future. These are just a few reasons why salary guides should only be one step of many in the process of making salary decisions.
1. Salary guides will tell you what, but they won’t tell you why.
There are any number of reasons why salaries might go up or down for a given position. Maybe the economy was looking quite good at the time the guide was written. Perhaps a huge merger occurred in your industry, leaving a glut of suddenly-unemployed professionals with a very specific skillset. New minimum wage laws in a variety of cities can drive up wages and salaries overall.
Regardless of the reasons, a salary guide won’t help you to analyze these factors. In 2018 salaries might be up and in 2019 they might be down. You won’t be able to budget appropriately for future growth if you are reliant on salary guides rather than gaining at least a basic understanding of the broader factors that affect salaries in aggregate over time.
2. Salary guides will tell you about jobs, but they won’t tell you about skills.
What’s a social media manager? Are they responding to upset customers? Composing clever tweets? Designing graphics? Streaming live videos? Are they developing long-term strategies and campaigns? Are they managing budgets? What about teams?
In reality, a “social media manager” might be responsible for any or all of these things. It could be an entry-level position or a high tech role for an experienced manager with years of marketing or PR experience.
If you need someone with strong video editing skills, the salary you offer will probably be higher than simply hiring someone who knows how to use Instagram filters well. If your social media manager is primarily managing themselves and their own projects, this commands a different salary than someone who is managing a team of specialists who handle customer communications, ad campaigns, and design respectively. A salary guide doesn’t know the difference between your needs and the needs of the business next door, which is another reason you shouldn’t rely on them when it comes to setting salaries.
3. Salary guides don’t know what value a position has to offer you.
Sometimes, all you need in a receptionist is a college student on the cheap who can cover the phones and work on their homework in between calls. (And that is a totally legitimate business decision!) Sometimes, you’ve built your company’s reputation on amazing customer service and need a receptionist who can be the public face of your organization on the phone and in person for dozens of walk-in clients.
The value of a receptionist has nothing to do with what the “average” business needs. It has everything to do with what your business needs. If an excellent receptionist has the power to bring in thousands of dollars in new work based on an impeccable first impression, the salary you’re going to offer for a top-notch employee is going to be much higher than at a business that just needs to make sure people get their messages in a timely fashion. Salary guides can’t tell you anything about that degree of value.
If you can’t rely on salary guides, where do you go to learn about setting appropriate salaries?
Salary guides exist because managers feel a lot of pressure to set reasonable salaries, especially when hiring new employees for the first time. In the end, though, it’s more valuable to go through the process of learning how to set salary ranges without leaning on guides too heavily.
To get started, download your free copy of How to Set the Perfect Salary. It won’t give you instant answers, but it will give you the right questions to ask and how to uncover the answers in your business, industry, and region when you do.