Determining if your company is paying competitive pay rates requires you to understand the many factors underlying industry, geographic, and job-specific wages. And as the global pandemic continues to exacerbate our tight labor market, many jobs remain unfilled, leaving employers pressured to pay above-average compensation to both attract and retain employees.
Money still rules
Compensation is of course just one of many factors people consider when choosing their next job. Issues such as workplace flexibility, diversity, and corporate transparency factor in highly as well. But money remains the top criteria for employees considering a new position. In fact, Inc. Magazine reports on a Cengage study that shows a full 91% of job “resigners” said they want to make more money. And with trends like this, businesses are paying attention.
For example, Nelson’s 2022 Future of Work Report provides data from our Q4 2021 survey of nearly 350 employers across industries. Results show that in 2022, 42 percent of employers in the professional sector and half in the industrial sector plan to reassess compensation to align with local market pay rates. Nearly a quarter of all employers surveyed plan to reassess compensation to be equitable across their organizations.
Offering a competitive pay rate is essential to attracting and retaining top candidates, but how do you determine if you’re paying the right salary for existing employees and new hires? Here are some tips.
1. Do your research
Ultimately, your wage rates need to mirror other organizations’ rates for the same or similar job titles. Salary guides can help you determine if your company’s compensation is competitive. Nelson’s 2022 Salary Guide, an annual listing of compensation across industries with a focus on California regional data, is a popular resource for customized salary recommendations.
In addition, sites such as Glassdoor, Salary.com, and the Bureau of Labor Statistics offer detailed compensation insights. Reviewing online job listings in your area can also provide guidance. You’ll see what other companies are offering for similar jobs in your industry within in a specific city or suburb.
Very important: Be sure to compare salaries for internal staff members with what you’re offering new hires for similar jobs. Tenured employees shouldn’t earn less than new hires in the same position with the same experience level. Make salary adjustments as needed, or you’ll risk losing your top performers.
2. Consider location
Because pay rates vary by location, consider adjusting salaries for your region. Most salary guides and calculators allow you to compute for various scenarios. You might also consider working with a staffing partner who can offer local market insights and detailed salary knowledge specific to your industry and location.
Additionally, the rise and acceptance of remote work, companies are now more likely to consider hiring employees from areas outside of their headquarter locations. In fact, 81% of professional employers surveyed in our 2022 Future of Work Report expect to have some level of remote workforce going forward.
However, the geographic differential can make it harder to determine an accurate pay range. For example, should two people with the same experience and job description be paid the same if one lives in San Francisco and the other in Billings, Montana?
One approach is to evaluate the cost of living where you are based, the cost of living where the employee is based, and the national average pay for the job, but there are also other factors to consider. Find out more in our blog about establishing pay localization for your remote workforce.
3. Look beyond salaries
As a result of pandemic “enlightenment,” many employers now focus on providing holistic benefits that support the “whole” employee. For example, Nelson’s 2022 Future of Work Report shows that 42% of employers say their company’s benefits program is designed to nurture employee wellness. More employers may jump on board to align with current benefits trends.
For example, perks that focus on career development and purpose, physical and emotional health, and social and community connection are quickly gaining popularity with employees and employers. Access to virtual coaching and paid subscriptions to yoga or meditation apps are just a few examples of this trend.
4. Always evaluate
Finally, keep in mind that offering a competitive pay range is an ongoing project. You should regularly benchmark your salaries against those in your industry and region to retain and attract top-tier employees.
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Clea Badion is a copywriter, social media manager, and corporate blogger from the San Francisco Bay Area. She’s been writing about career and workplace trends for over a decade, specializing in blogging, website content, ghostwriting, thought leadership pieces, executive speeches, and presentations.