How to set competitive salaries

Knowing how to set competitive salaries is a key skill that all employers, all business owners, and all office managers need to develop.

Knowing how to set a competitive salary for your current employees and your future or prospective employees is key to creating a successful company. In order to attract the best people in your field and in your industry, you need to be able to attract those people with competitive salaries. Otherwise they will pass right by your offer and go to somewhere better.

However, it is important also to understand that a competitive salary does not mean that you offer prospective employees whatever salary they ask for. A competitive salary is a salary that is running at about the same as other people in your field at a similar level in a similar position in your area. This means that competitive salaries are not something that will just break your company's bank; a competitive salary keeps current employees happy, entices prospective employees, and also keeps your accountants happy.

There are a number of different ways that you can figure out what a competitive salary is for people in your area in your particular field.

1. Start with the publications.

There are a number of different publications out there that are published annually in order to indicate basic and common salaries for a number of different positions.

For example, NACE's Salary Survey gives you the standard entry level salary for computer programmers, accountants, engineers, and other similar positions. This can help you ensure that you are in keeping with the general starting salary, so that you can entice employees but also so that you aren't paying them too much.

Salary Survey is a quarterly report that organizes its information by curriculum, the type of employer, the particular job function, and by the degree held by the potential employee: bachelor's degree, master's degree, and doctoral degree.

Salary Survey also includes information for almost 80 different disciplines at the level of a bachelor's degree. There are over 40 areas for people who have a master's degree, and over 20 for people who have a doctoral degree. This particular publication also lists what the average offers are for these different positions, along with the salary ranges for those positions so that you know the area that you want to negotiate within.

Two other websites that can help you determine what the going rate is for the positions that you are advertising for are www.payscale.com and www.salaryexpert.com.

2. Ask yourself a series of questions

When you are trying to determine what a competitive salary is for a particular position, the first question that you have to ask yourself is how much is this person worth to me? Knowing how much you are willing to pay for a good employee in that position can help you determine what your range is going to be for salary negotiations.

For example, think about whether or not the employee in this position is actually going to bring revenue into the company. You will be paying that employee more than your secretaries, for example.

When you are determining how much to pay people who are administrators or support, think about how much you would have to pay if they did not actually work for you. Then determine what a competitive salary is for you. Think about the value of your IT support person, your quality control analyst, or your administrative secretary.

Ensure that you are not just offering a competitive salary to potential employees, but also to the employees that you already have. Your current employees are valuable assets to your company. Don't force them to look for new jobs because they are underpaid with too few benefits.

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How to set competitive salaries