"What should we pay?": A quick guide to setting remuneration
We often get asked the question "What should we pay?" by employers who are looking to hire a new team member. Whether it's for an existing role or a new one, there are a few easy things that you can do to help determine the right offer to put on the table.
A number of industries are covered by Modern Awards which outline a set of minimum wage entitlements for various roles. If the role you're recruiting for is covered by a specific award, this should be the first thing you look at. It will help ensure that you not only comply with your legislative obligations but also that you're not paying wages that are unrealistic or misaligned to the role.
Never assume what your employees' minimum entitlements are, always ensure you know for certain. We once worked with a client who set pay rates solely based on what they knew other similar businesses were doing. Unluckily for them, due to relevant legislation that kicked in after they had formed their business, they were paying hundreds of dollars over what they needed to pay their employees. This meant a significant loss of capital that they could have otherwise put towards their product line and improving their operations.
Get an idea of what the salary is for similar jobs in the market – this can be done by a simple search on various job boards like Seek or My Career where quite a few job ads display the salary.
Alternatively, there are a number of free salary surveys available online like Hays and My Career that will give you a good starting point to benchmark from. It doesn't hurt to ask around either. If you have contacts and networks in similar industries or who have been in similar roles to the one that you're recruiting for, get a ball-park figure from them as well. This will ensure that you're offering a competitive salary that will help attract the best talent to the role.
Set yourself a scale
It's not always practical to have a set salary in mind for every candidate you interview. Work within your wage budget to determine an appropriate scale – set a minimum and maximum salary figure that you're willing to offer so that you can create some room to move and/or negotiate with. You may come across an amazing candidate who you're willing to pay a little extra for in order to get them on your team.
Similarly, you may find a candidate who is the perfect fit for your business and has all the makings for success in the role but just lacks the experience so it may make more sense to offer them a salary at the lower end of the scale to begin with.
Working through the above steps will help take the guess work out of what salary to offer and ultimately help you land the best candidate for the role. Win-win!
Janelle McKenzie and Abiramie Sathiamoorthy are the co-founders of E&I People Solutions. Janelle has a hands-on background in HR, her philosophy is all about providing practical solutions that offer businesses real value. Abiramie has worked with a range of different businesses to set up or enhance their people processes with an end goal to help create high-performing teams.