Compensation Rates in Today's Economy
April 13, 2010
With unemployment high and profitability low, many businesses have shifted focus away from compensation. Yet as the economic recovery gains momentum, employee compensation is becoming an increasingly important factor in business success. The economic downturn has had a significant effect on compensation rates
- Ignore salary averages. While national averages may give a clearer picture of the general economy, setting practical salary rates depends on local compensation levels, regional expectations and variations according to industry.
- Research organizations. Human resources associations and industry organizations can be useful sources for specific salary data and can often provide comparative details.
- Talk to peers. Speaking to another business in a similar line of work, but that is not necessarily a competitor, can be a good way to gauge what other companies in the same area are paying their employees.
- Track competitors. Finding out what your competitors pay their staff can be difficult, but is a fairly common tactic in business intelligence and compensation planning.
- Determine a range. Instead of settling on a specific number, determine salary ranges for each position in order to have flexibility in looking at candidates or adjusting compensation when necessary.
- Ask candidates. It's always helpful to ask prospective employees about their own salary expectations and weigh them against the company's preferred range. Remember that compensation isn't just salary, but also benefits, perks, training and opportunities for advancement.
- Revisit your compensation levels. Compensation fluctuates according to the larger business landscape, making it important to regularly examine your salary and benefits packages to determine if they're still competitive.