How Much Should You Pay Your Employees?
Are you struggling with trying to figure out how much you should pay your employees? You’re not alone. Every employer in the world faces this common dilemma.
Wages and benefits are important things to figure out. You can’t just pull a number out of thin air and go with it. You need to pay a competitive wage that also doesn’t bankrupt your business. Nailing down an employee’s salary is challenging.
Here are a few tips that will help you come up with the right number.
- Follow The Law – It’s your job to make sure that you follow all state and federal laws pertaining to wages. You have to at least pay minimum wage in your state. Once you meet this criteria, it’s time to move to step 2.
- Do Your Research – Try to determine what a competitive wage really is. It varies based on your location, cost of living in your area, and other factors. It’s easy to find salary data online at websites like Payscale.com, Salary.com, or the Bureau of Labor Statistics. These are great starting points, but reach out to your network, friends, chamber of commerce, job boards, or even your competition. Where ever you do your research, make sure the information is up-to-date.
- Plan For The Future – It’s important to know how much you should pay an employee, but you also need to consider how much an employee is going to cost you. Taxes, unemployment insurance, health care, 401K’s, and hiring costs all add up. Plus you need to factor in bonuses, wage increases, and promotions in the future. Be sure to calculate the full amount an employee will actually cost.
- Think About The Employee – You need to pay an employee a living wage. Pay is an incredibly important part of their life. They need to be able to pay the mortgage, buy food, and enjoy life. You need to pay them what they are worth so that they will stick around for the long haul. Employee turnover is often costly for your company.
- Set A Pay Rate, But Have Some Wiggle Room – It’s smart to use a salary range when you write a job description. This will help you attract more applicants. You also have the ability to adjust the pay rate based on an employee’s experience, education, and skill set. You may have to pay more for top talent.
When it comes to pay, the rules are not set in stone. No matter what number you ultimately choose your employees will always want more. You have to use your best judgement based on competitive rates in your area. Do your research and do your best.
If the numbers don’t work for you to hire a new employee, then maybe it’s time to explore the benefits of hiring freelancers.