How to Determine Employee Salaries

One of the most challenging tasks of starting a new business is figuring out how much to pay your employees. You want to pay highly enough to attract and retain good talent, but you don’t want to pay too much and hurt your business’ sustainability. At the same time, you have to remain compliant with labor and wage laws in your area.

One of the best ways to determine what to pay an employee is to look at the wages and salaries other people pay for similar work. There are a lot of factors to consider here, including where your business is located and what your local minimum wage is. Looking at wage data for a state with different wage and labor laws might skew your analysis on what you should pay. The Department of Labor keeps a database of wage data for various areas of the country.

Factor in a potential hire’s education and experience when making a salary offer. Someone with more education and experience will expect to make more than someone who is lacking in those categories. You may be tempted to start a hyper-qualified employee at the top of your pay scale, but that is a mistake. You should take the employee’s future into account. Eventually, that employee will have earned a raise that will be difficult to give because you’re already paying him or her every dime you can afford to. So, leave enough room for salaries to grow. You should also take the benefits and perks your company offers into account when you’re determining salaries.

With proper planning and research, you’ll be able to pay your employees a fair wage that will make them happy and loyal.

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