- On May 27, 2021
Salary evaluations help ensure the wages you pay for each position remain competitive with the salaries of other firms in your industry and geographic area. Performing evaluations regularly can help you keep the people you have as well as recruit new talent.
For larger businesses, human resources will usually determine the best way to evaluate salaries for various roles. Business managers for small and local operations are usually responsible for setting salaries for their staff. Many firms conduct salary evaluations with annual budgets and performance reviews, separating the discussion of pay changes from feedback about the worker’s on-the-job contributions. Regular salary evaluations can help your company’s retention efforts. As your employees gain experience and meet or exceed performance expectations, they want to feel the company is compensating them appropriately through their salary reevaluation. A regular salary evaluation can also uncover other important information, such as if you’re overpaying for certain positions.
When looking for references for salaries, the Occupational Outlook Handbook from the Bureau of Labor Statistics is a useful tool. It includes wage information and other details for a wide range of jobs. You might check out your competitors’ websites and online job boards, as well, for positions in your industry and region. If team members depart your organization, conduct an exit interview to gauge whether or not they felt fairly compensated. Consider their feedback when determining the salary level you will offer for the role when hiring.
Not only do salaries for a job change over time, based on the incumbent’s experience level, but the market value of some jobs can also change quickly, especially during a period of rapid technological innovation. Many of the jobs needed in the future workplace will require broader skill sets. They also will demand higher levels of compensation, experts predict. So, as an employer, you’ll want to pay close attention to how jobs are evolving in response to technological change. You can also use a salary evaluation when setting salaries for new positions you’d like to add to your team, including these emerging roles with new skill sets. The depth of knowledge of various new technologies required will vary from department to department in a company. While your business may not need to hire an AI specialist such as a programmer or engineer, for example, you may need to recruit a finance professional who has worked with AI and can identify AI use cases for the business.
While having a salary baseline is important, wages aren’t the only thing to weigh in your overall salary evaluation. Also factor in employee benefits and perks, vacation time, 401(k) matches, and bonuses.
The salary evaluation process at your firm should be a focused effort and have thoughtful research to help you determine the value of the role. Remember also that evaluations of some jobs at your company may indicate that the role, though important, doesn’t need a full-time occupant. Having a flexible staffing strategy and using highly skilled staffing professionals allows you to access specialized resources without incurring the cost of a lasting employee.
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