What’s In A Number? We’re Talking Salary Here
As we continue in the Fall season, we are getting cooler temperatures, pumpkins a plenty and for business leaders the 2023 budget season, performance reviews and salary planning.
This has been an interesting year on many fronts. We are putting the Pandemic in the rear view mirror, we have gone through the great resignation to the great retention focus, high inflation, and signs of a slowing economy. Some companies over hired in the last 12-18 months and have been laying people off the last few months even in a high growth state like Texas.
How are you as a business leader reacting to the changing business environment? The need to hire people still exists and in many cases the salary that good candidates are demanding is higher than what you are paying internally. What do you do when you have to pay 15-20% more for qualified candidates to join your company than you currently pay your employees who may have been with you for years and are performing well? Bringing in someone unproven at a higher salary than a loyal employee who is performing well makes no sense, but that’s the reality of the current situation. This not only feels wrong, but if your existing staff finds out about this you may have a mass exodus on your hands.
You probably have no idea what the current market is paying for jobs in your industry. Most companies have little to no idea about external pay. The irony is that most businesses use many financial metrics to track revenue, margin, and profitability and individual KPIs or goals that employees are accountable to hit. However, many stay in a bubble when it comes to employee compensation. Your overall payroll and benefits line are probably the highest single line items on your balance sheet.
How do you get external compensation market data on your job positions? You can look in several places such as the Bureau of Labor and Statistics.gov website https://www.bls.gov/ You can also find limited information from State government sources. We help many of our clients utilize our compensation services to benchmark their specific positions in the external marketplace by targeting your specific location, industry, revenue size, and positions by years of experience, title and other factors.
Market pay has changed considerably in the last five to ten years so reviewing your internal pay against what is occurring in the external market makes a tremendous amount of sense. Before going into your salary planning cycle, do some market research vs. going in blind and hoping for the best. Remember that hope is not a strategy! If you’d like to find out more on salary planning and compensation in general sign up for our upcoming webinar next month. I look forward to seeing you there!
We are here to help you with the people side of your business: employee engagement, retention programs, performance management, vision, and strategic plans, leadership development, selection & onboarding, compensations programs, organizational design, employee handbooks, core values, and all things HR-related.