Recruiting

Competitive Salaries: The Solution to Finding Great Talent

Organizations compete not only for customers but also for talented employees to work at their organization. For some companies, these competitors may be one and the same—the same competition may create competing products or services and also be vying for the most talented people in the market. For other organizations, the list of competitors for talent may be completely different than those competing for the same customers. Either way, it pays to know which competitors are trying to get the best employees in your area—and to know where they stand in terms of pay and benefits on offer, so you know what you’re competing against.

Aligning Competitive Salary Position with Organizational Goals

When setting the salary level for a given role, the first consideration is the organization’s goals and vision for the future. This will shape where the organization wants to be in terms of their position in the market. For example, if the organization wants to innovate and grow at a fast pace, it may make sense to pay at the top of the market to attract the top talent. Or, if an organization wants to emphasize sales growth, it may make sense to offer more “at risk” salary—pay tied to meeting specific goals, like sales goals or profit goals.
As such, the place to begin is to look at the organizational goals and objectives and see where salary can be applied to help to meet those goals and objectives, then assess what that means in terms of how your organization’s salary offering will compare to other employers who are competing for the same potential employees. In some cases, it will make the most sense to aim for the top of the market (as noted in the example above). In other cases, it will make more sense to aim for an equitable salary somewhere in the mid-range of what is on offer, particularly if salary budgets are tight and the goal is to keep status quo without reducing retention rates. And some companies may even find it makes the most sense for them to pay at the lower end of the range on offer in the market—particularly if one of the company’s main objectives is keeping costs low, as may be the case with a discount retailer, for example.

How to Determine Competitive Salary Landscape

Once the organization has determined where it wants to compete (i.e., where to set salaries within the range on offer in the market), the next step is to determine that range! So, how do you find out what the competition is paying?
First, you have to compile the data, and to do that, you have to define the market. What is the competitive market? Put boundaries on it. You’ll need to define things like industry, geography, company size, etc. All of these will narrow down the points of comparison. Once you’ve defined the competitive market in terms of geography, industry, and company size, you can start looking for data. You’ll be doing market comparisons on a role-by-role basis, so you’ll also want to be sure that all job descriptions are accurate and current, as they will be the basis for comparison.
In part 2 of the article, we’ll take a look at some sources for competitive salary data.

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