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Tips on Conducting a Spot-On Employee Compensation Analysis
Yes, people really do quit their jobs for more money. In fact, according to Payscale’s Compensation Best Practices Report (2015), money has been the #1 reason people leave medium and large companies. Your employees may love you as a boss, they may love their jobs and their co-workers, but they will leave you if:
- They are not making enough money to meet daily needs and future financial goals
- Their current compensation is too little for the effort the job requires.
Therefore, you need to make sure that the compensation you pay is in line with (or better than) what job seekers and your employees can find elsewhere. There really is no way to save money by low-balling salaries; turnover can decimate those savings rather quickly. Remember the often-repeated statistic that every time a business replaces a salaried employee, it costs (on average) 6-9 months in salary? Well, if you paid an employee $10-15K less than they could make elsewhere, and she leaves within 2 years, then you have paid more in the long run.
Therefore, you need to review and adjust your salary ranges every year to match (or exceed) competitors’ ranges and to adjust to economic ups and downs – both locally and nationally.
However, external salary drivers do not always take into account internal goals. If improving employee tenure and boosting productivity is important, then that can play a huge factor in what you pay your employees. High turnover can decimate employee morale and low morale can be extremely dangerous in this age of Glassdoor.com. It may not be enough to simply adjust salary ranges as the market moves; you do need to pay attention to the mood within your company.
Getting Accurate Salary Information
Let’s face it…doing primary research on role and industry compensation is hard and it is expensive. Most companies cannot afford it. Therefore, it makes more sense to leverage secondary salary information from a variety of reputable sources. This can include several free sources, including:
- Bureau of Labor Statistics(BLS). The BLS has one of the largest and most comprehensive repositories of salary information available. The BLS conducts salary surveys and has the average hourly costs and trends for many different positions in various industries as well as for specific geographical locations.
- If you are a member of the Society of Human Resource Management (SHRM), they maintain a Salary Survey Directoryof providers that may sell their compensation survey data. They also manage the SHRM Compensation Data Center.
There are also several paid sources, including those from:
- Economic Research Institute
- Job Search Intelligence
- CareerBuilder Talentstream
Don’t underestimate the power of networking
Remember, you are not the only company that is trying to figure out appropriate compensation levels. Other companies in your areas are also grappling with the issue of compensation. So get out and talk to others in your industry. Join the local chamber of commerce, networking groups (both on- and off-line). Knowledge is a key part of success, and you will surprised at how willing others are to talk about their recruitment struggles.
Work with a reputable staffing firm
If you cannot offer competitive compensation rates, you will lose out on great hires AND also lose many of the employees you already have. Snelling can help. We have worked as a trusted advisor with many of the other leading companies in your area, and we can help you. We know what it takes to find the best fit employees for your open positions- in terms of recruiting, interviewing and salary negotiations – and we can help you as well. So contact us today and let’s get started.