by Luc Turner

Created on: September 17, 2010

The Science of Setting Employee Salary

Believe it or not, there is a science to setting base pay. I could offer every employee 100K a year, but in a month I would have complaints in every direction from employees complaining about how they contribute more than the next person, and the demand for raises would begin. When setting base pay, you need to move through the data and create a salary point that will provide you with what you want in an employee. Though this topic could be an entire novel (and trust me, there are volumes on this), I will try to distil the information into a clear equation for the small business owners, and my fellow HR professionals.

The most common “formula” I have seen HR people use goes a little something like this: (1) This is the title we like to use, (2) Find that title for on Monster, Career Builder, and one or two other posting boards; (3) Look up the job descriptions and published pay rates; (4) Set your pay and posting based on this; (5) Post your job on the same boards.

This is like saying you can cut a tree down with a handsaw with enough time and elbow grease (after all you saw your grandpa use one once), so what’s the point in using a chainsaw? This “formula” works, in a way. You get the same candidates the people you copied get, and attract the same people in the same way. However, any position varies differently from company to company in the actual work performed. An office manager at a 5 person company is not the same thing as an office manager at an office with 1000 employees. They don’t use the same programs, and time dedicated to functions are very different between these two positions (with the same title). With so many people copying off of one another, problems are truly plentiful in this method.

Step One: What is the job, really?

This step is often overlooked. Step one is to define the job itself. What is genuinely involved in this specific job? Once you have done this, use the answers to find the truthful title (Check out the DOL “Career One Stop” for example) that fits the job you want people to do. The site I prefer to use for job analysis is O*net. I strongly discourage using any site other than these two, because the science used on these two sites is strong and is public. There are no “secret proprietary” voodoo nonsense obfuscating how they obtained the numbers.

Remember, the position you post comes filled with assumptions from your target audience

• 1
• 2
• 3
• 4
• Next Page >>