Choose the Right Salary Ranges for Prospective Employees

Choose the Right Salary Ranges for Prospective Employees

Determining employee salaries is tricky business when it comes to the health and growth of your small firm. On the one hand, nabbing and retaining the best and brightest talent possible can play a critical role in the future growth of your organization. On the other hand, bloated payroll can hinder the success of your business.

To strike the right balance, it’s crucial to be very specific about your hiring criteria for any given position. Obviously, those criteria change, depending on whether the job encompasses administrative duties, sales, IT or other technical expertise.

What does the job entail, and how might it benefit your organization?

General criteria could include any of the following:

  • Specific required knowledge and skills
  • Years of experience
  • Complexity of the job, required conceptual thinking
  • Management level
  • Decision making power
  • Possible financial impact of the position. (Certain positions, such as marketers, potentially can bring in much more revenue than, say, bookkeepers. But even then, the base salary itself is negotiable, as salespeople tend to be motivated by commissions.)

Once you’ve interviewed potential hires and determined your top choice, methodically chart those criteria against your candidate’s profile.

Determine market value, then divide and conquer the salary conundrum.

Next, it’s important to know what the market value is for a given position in your field. Draw your data from at least three sources to get a good grasp on the subject. Good resources for salary data include:

At this point, determine a range for your position. For example, let’s say the industry average for the job you’re seeking to fill is $40K. To determine what to offer, consider that salary in terms of a range that veers $6,000 in either direction: $34K - $46K.

A $12,000 spread makes it easier to divide the range into four quartiles. Why do that? Because now you’re going to break down those quartiles according to the criteria you set out for the job. The following quartile system is one used by a number of universities:

First Quartile of Salary Range

Second Quartile of Salary Range

Third Quartile of Salary Range

Fourth Quartile of Salary Range

Applicant meets the position’s minimum requirements, but little or no more than that.

Applicant exceeds the minimum requirements via additional experience, knowledge or skill sets.

Applicant is an expert in all criteria of the job and has broad knowledge in related areas.

Applicant’s expertise is far and away above others in his or her field. It’s rare to make an initial offer in this quartile.

In general, it’s a good idea to make your new hiring prospect an offer at or below the midline of the salary range; that way, there’s room for both present salary negotiation and future growth.

What if your organization cannot afford the general salary range? Sometimes candidates are open to taking a lower initial salary under one or more of the following conditions:

  • Flextime, or the possibility of working remotely
  • Additional paid vacation
  • Matching 401(k) contributions
  • A salary increase based on meeting specifically determined metrics
  • A bigger title

Salary determination is not an exact science, but the above should help you get started on attracting the right and best person for your organizational needs.