A salary compensation analysis uses internal and external data to determine whether an employer rewards or pays employees fairly for their work. It simply shows how you’re paying your employees in comparison to other companies.
It’s not uncommon for payroll to account for 50% or more of a company’s operating budget. This substantial expense plus the desire to attract the best talent is an incentive for companies to offer their employees competitive wages and salaries.
It’s always in your company’s best interest to offer competitive wages and benefits to your employees. A salary competitive study will guarantee that you are headed in the right direction. let’s look at seven steps to getting started.
1. Research compensation trends
You may better grasp how your compensation structure compares to what other firms are giving by gathering information on how much other companies pay their staff. It also guarantees that your pay structure is supported by data.
Make sure the data you’re looking at is correct and originated from a reliable source. The data must also be verified and up to date. Check out crowd-sourced data sources like PayScale’s Salary Trends to obtain this information.
The Bureau of Labor Statistics’ Occupational Outlook Handbook is another resource you can use. The median income for various professions and levels of expertise can be found using this resource. It will also display the industries with the quickest growth and highest salaries.
2. Conduct a job analysis
You need to obtain and analyze data on each position in your company after gathering market data on salary. A job analysis takes into account the duties of the position and the level of experience needed to fill it.
By interviewing your staff, monitoring the tasks they perform, and conducting surveys, you can acquire this data. You can create a thorough job description with the use of this material.
3. Set a pay range for each position
Even when a standardised pay structure has been established, not all employees with the same job title will make the same salary. To take into account disparities in education and experience, it makes sense to establish a salary range.
For instance, entry-level workers may be placed in a job with salary that is close to the minimum. As a result, the individual has the chance to advance their career and increase their income.
In order to be sure that there is no discrimination in how you are paying your staff, don’t forget to review your company’s data on race and gender.
4. Know the legal requirements
It’s crucial to confirm that you are adhering to both federal and state minimum wage laws. Costly class actions may follow from failure to abide by these standards.
The federal minimum pay is $7.25 per hour, although 29 states have their own minimum wage rules that are greater than the federal minimum wage legislation. To be sure you’re adhering to state and federal standards, you should consult an attorney.
5. Be transparent about your pay scale
Once you’ve decided on your new pay scale, it’s time to inform your current and potential employees of the changes. The two most crucial inquiries you need to address, according to PayScale, are:
- What does my position pay?
- How was that pay scale determined?
It’s important to back up your assertions with evidence. Otherwise, it can be challenging to explain how these wage ranges were established. Workplace issues can arise if it appears that you are being evasive in your response.
6. Train your managers
Your managers must talk about pay with your employees when they receive their yearly reviews. You need to train them on how to handle these situations, so don’t assume they already know how to do it.
Make formal training available for your managers on how to talk to staff members about salary and benefits. They must understand when these discussions are appropriate, how much information they may disclose with employees, and which queries they should direct to HR.
7. Re-evaluate frequently
Finally, keep in mind that wages fluctuate along with the market and are not fixed. At the absolute least, you should review your pay structure every two to three years. This will help you attract and keep highly qualified staff and guarantee that your pay scale is competitive with what other businesses are providing.