If you’re a growing small business and need help, there are a number of non-employee options available to help you staff your business, but if you do choose to move forward with part- or full-time employees, what should you pay them?
The general rule of thumb is to pay a salary based on experience, location and the available talent pool. But how do you bring all these factors together and come up with a number that potential candidates will find attractive (and you can afford)?
Here’s what Brad Farris, a small business advisor and managing editor of EnMast.com (a service of Anchor Advisors, Ltd., a Chicago small business consulting firm), recommends:
Have a Solid Job Description
If you don’t know what you’re looking for, it’s going to be really hard to find it. In particular, when you’re looking at pricing a job there is often a wide range of jobs that have the same title. So you need to be really specific about the range of duties and responsibilities of the job.
The problem for many small businesses, as Farris explains, is that they are often piecing together jobs based on the work that needs to be done in the organization, which means that these job descriptions are often for jobs that don’t exist in the real world – which makes it hard to figure out what that job is worth. Farris suggests trying to build a job description that aligns as closely as possible with what other organizations advertise (search online for job description templates). This will make it easier to price the job.
Look Around – What Is the Industry Paying for That Job?
Do an online search for the job you’re looking to create to try and gauge how the market is pricing that job. For example, search for “social media and content management specialist salary range.” Then narrow your search to your region or city: “social media and content management specialist salary range Boston.” What you’re looking for are local guides or salary surveys that can help you better understand the market for this job in your area.
Next, search trade magazines or sites potential candidates might visit. These often publish their own salary surveys.
Ask around – talk to other business owners what they pay for jobs like the one you’re trying to hire for. Try to compare apples to apples, so get into the specifics of the duties involved.
Conduct Advanced Searches on Job Sites
Even after completing this type of research, you may just find you still haven’t found the market guide price that fits your job description. One way to drill down a little more is to query online job sites like CareerBuilder, Monster or Jobs.com. Using the advanced search tool, you can really drill down into specific job keywords, categories, (exclude location for now, you’ll come back to that later) that match your needs – and if you can, exclude jobs that don’t show salary information in your search. Your search results will give you a good picture of the current market – what employees are paying, right now, for jobs like yours. Browse the results and search for the job descriptions that best match yours; print these out and narrow down your list to the ones that are the closest. What you should see start to emerge is a salary range – some jobs may have more responsibility, some less – but keep that range in mind.
Do a Cost-of-Living Comparison
Farris next recommends using a salary relocation calculator (easily found online) to further narrow your search. So, say your printed list of comparable job descriptions includes a good fit but is for a job based across the other side of the country. The cost of living calculator will give you a good indication of what an equivalent job commands in salary in your city or neighborhood, further narrowing the salary range that you had earlier.
Advertise a Salary Range
Instead of picking a number and sticking with it, Farris recommends keeping that narrowed down salary range in mind, and even including it in your job advertisement (for example, “salary range – $25-30,000 commensurate with experience). Then take a look at some candidates at both the low and high end of the range. Ask yourself if you’d be able to pay $5,000 more to get a candidate with greater skill or experience. If you don’t see the value, then go ahead and hire them at the low end of the range.
The key is to remember that having a salary range gives you the flexibility to bring in a solid pool of talent; then assess individually where they are against the market.