Are you trying to decide how much to pay an employee? Hiring an employee is an important part of business growth but you need to hire the right person at the right price to benefit in the most effective way.
The median household income in the United States is $56,2516. What someone earns can vary based on their experience, work location and the demand for their profession.
Read on to learn how to decide on a salary number when it comes to paying employees at your company:
Research Market Wages
It’s no secret that all else the same, someone’s salary can vary quite a bit based on the location where they work.
Before deciding on an employee salary, spend time researching the wages in your area for that position. Besides performing internet research on this issue, you can also speak to other trusted employers in your industry about how they approach the hiring decision.
If you aren’t offering compensation that is competitive with other employers in the market, you may have a hard time convincing a potential hire to accept a job offer and work for your business.
Determine Anticipated Profitability
Hiring someone is a calculated risk for your company and for your new employee. Both parties will be adjusting to working with the other and the uncertainty about how someone will perform in their new role.
An effective way to determine what to pay an employee is anticipating their profitability to your business.
Are you hiring an entry-level employee with no experience in the field or someone that has developed expertise in this role? The answer to that question, along with your projected future business growth, can help you make a more educated decision about what to pay an employee.
A new hire may not be as profitable as someone with years of experience but the former can often be hired at a lower price than the latter.
Be Open to Negotiations
Even after you’ve decided on a compensation package for a prospective employee you should still be open to negotiations.
An estimated 39 percent of workers sought to negotiate a higher salary they received their last job offer.
This statistic alone means it’s more likely a new hire will forego negotiations. Even with this in mind, you can’t overlook the chance that they do ask for higher compensation.
If you aren’t ready to negotiate higher compensation, you risk making a bad impression on a prospective new hire. You may also lose them to another employer that is willing to negotiate.
Deciding what you should be paying employees is an important part of operating your company. By considering what you can afford and what is fair, you can ensure you are making the best business decision now and into the future.
Are you interested in learning more about how to run a successful business? Check out our career section to discover more tips and tricks to help you with business development and more!