Money Talks: How To Correctly Set Rates Of Pay
Wondering how to establish the right pay rate for new hires? Click here to learn how to set rates that will attract and retain the best talent.
Setting the right pay rates as an employer can be a tricky balancing act.
If your rates are too high, it will be difficult to scale up your workforce and maintain cost efficiency. If your rates are too low, then you’ll struggle to fill both permanent and contracting positions.
A survey conducted by Matchtech found that salary was the leading motivator for switching roles among UK workers, so if you want to bring in fresh talent (and keep your existing employees happy) then you need to find the sweet spot in terms of pay.
If you can set the correct pay rates, you’ll be able to acquire the talent you need to tackle high-value projects, resource your teams effectively, and ensure that staff feel valued and compensated for their work.
In this guide, we’ll explain how to set appropriate pay rates that help you to attract, and retain, the best industry talent.
How to correctly set rates of pay
1. Review average pay rates in your industry
If you’re not sure about the right rates to offer new hires, taking a look at the rest of the industry is a great place to start.
Find job postings from other businesses (ideally of a similar size) in your sector, and check out the salary they’re offering for similar positions.
Although you may not be able to find a concrete figure, you should be able to get a solid understanding of the pay range that candidates can expect.
Recruitment agencies such as Matchtech can also be extremely helpful here, as they’ll constantly have their finger on the pulse of the job market. If you want to know more about average pay rates, or what certain skill sets are commanding in terms of salary, reaching out to a recruiter is a good idea.
2. Think about experience, training, and education
Whenever you’re pulling together a job description or planning your pay offering, think carefully about the type of talent you’re looking for.
Is your ideal candidate an industry veteran with specific qualifications? Or are you searching for a more junior hire who can learn on the job?
As a rule of thumb, the more experience and expertise you’re asking for in a job posting, the higher the expected salary will become.
This is particularly true if you’re looking for a specialist. An engineer with a master’s degree and multiple years of experience in a niche area, for example, will expect appropriate compensation. If you want specialist expertise, you’ll need to set your rates accordingly.
Setting your rates based on clear guidelines (e.g. years of experience, qualifications) is also highly important for ensuring equal pay. To avoid creating unfair pay gaps, always make sure that you’re adjusting pay rates based on specific criteria.
3. Factor in relevant employee benefits
Although the final pay figure you’re offering candidates is very important, additional employee benefits can also be highly persuasive for prospects. If you’re offering any compelling benefits for applicants, make sure they’re factored into your pay rate calculations.
According to research, 80% of employees would choose additional benefits over a pay rise, while 69% of employees claim they might choose one job over another if it offered superior benefits.
A Matchtech report on STEM talent also found that shares/investments and health & wellbeing perks were some of the most compelling company benefits that could incentivise a job move.
While workplace benefits should never replace a good pay rate, they can help to put your salary offer in context. Try to calculate the monetary value of any workplace perks you offer, and make sure this is reflected in your rates.
4. Stay flexible with your rates
Setting a clear pay rate is key for attracting the right applicants, but try to stay flexible to avoid missing out on potential hires.
For example, setting a pay range (rather than a fixed number) that can be adjusted based on experience, skills, and qualifications can help you to accommodate different candidates. If an applicant for a position has a significant amount of experience, then you can offer a pay rate at the higher end of your scale.
(Just try to avoid posting pay ranges that are too broad or vague, as this can be disconcerting for candidates.)
Don’t be afraid to adjust your pay rates for the right talent, either. If a prospect has the potential to add serious value to your business, and they’re looking for a slightly higher wage, then you should be open to weighing up the long-term benefits of the hire.
5. Regularly review your rates
Finally, always make sure that you’re reviewing and re-assessing your pay rates to stay competitive.
Average salaries will shift over time based on the demand for certain skills and qualifications, so keep your eye on the rest of the market to avoid falling behind.
If you feel like you’re out of touch with the expected wages for your industry, a recruitment agency such as Matchtech can help you to course-correct and set the right rates based on their knowledge of the market.
Setting the correct pay rates for a job is critical in a competitive marketplace. With the right salary offer and recruitment strategy, you can ensure you’re attracting candidates that offer huge value to your company.
If you need guidance on setting pay rates or securing the best hires for your business, Matchtech can help you to successfully recruit market-leading talent with the expertise you need.
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Looking for more advice and useful resources about attracting candidates? Click here.