Are You Paying Competitive Pay Rates?
By Clea Badion
In any year, determining if your company is paying competitive pay rates can be a challenge. Add a global pandemic into the salary conversation and knowing what to pay your employees becomes even more complicated.
For example, many companies that had planned to implement pay raises have had to reconsider as the pandemic has impacted their bottom line. Even some thriving organizations have taken a conservative approach to increasing salaries given the unpredictable environment.
In fact, in Gallagher’s 2020/2021 Salary Planning Survey, nearly half of the organizations surveyed plan to re-evaluate their salary increase plans in 2021.
Because offering competitive salaries is essential to attracting and retaining top candidates, it’s important to get it right. In Q3 2020, Nelson spoke to over 200 employers about the impact of COVID-19 on their businesses, and these companies said talent acquisition and retention were among their most pressing workforce challenges.
So how do you determine if you’re paying a competitive pay rate for existing employees and new hires? Here are some tips:
Do your research
To attract and retain top talent, you need to offer a pay rate that’s similar to what other firms are paying for the job. Salary guides can help you determine if your company’s starting and existing employee salaries are competitive. Nelson’s 2021 Salary Guide, an annual listing of compensation across industries, is a popular resource for customized salary recommendations
In addition, sites such as Glassdoor, Salary.com, and the Bureau of Labor Statistics offer detailed compensation insights. Reviewing online job listings in your area can also provide guidance. You’ll see what other firms are offering for similar jobs in your industry in a specific city or suburb.
Because pay rates vary by location, make sure you adjust salaries for your region. Most salary guides and calculators allow you to make those adjustments. You might also consider working with experts such as a staffing professional who can offer local market insights and detailed salary knowledge of your industry and location
The rise of remote work during the pandemic has led many companies to hire employees from areas outside of their headquarters, and that makes it harder to figure out an accurate pay range. Should two people with the same experience and job description be paid the same if one lives in San Francisco and the other in Billings, Montana, for example?
One approach is to evaluate the cost of living where you are based, the cost of living where the employee is based, and the national average pay for the job, but there are also other factors to consider. Here’s more detailed information about compensating your remote workforce.
Look beyond salaries
While the pandemic has led to more applicants for certain jobs, according to research from the 2020 Q4 Nelson Pulse Report, hiring top talent remains challenging for many companies. Some candidates are reluctant to commit to a new job in an uncertain time or are scarce due to health or safety concerns. And in truth, the best employees are always in demand, so offering in-demand perks and benefits can aid in both retaining current employees and attracting top candidates for open positions
For potential new hires, it’s important to highlight benefits such as health and dental care, retirement or 401(k) matching programs, and paid time off. In addition to competitive pay, offering perks such as a work-from-home option after the pandemic is over, a flexible work schedule, and family leave, can also distinguish you from other companies
Top perks and benefits are also key to retaining existing employees, so be sure to compare salaries for internal staff members with what you’re offering new hires for similar jobs. Top-performing employees shouldn’t earn less than new hires in the same job with the same level of experience. Make salary adjustments as needed or you’ll risk losing your top employees.
Finally, keep in mind that offering a competitive pay range is an ongoing project: you should regularly benchmark your salaries against those in your industry and region to retain and attract top-tier employees.