How do you know when it’s time to offer higher compensation for open assignments at your company?
The answer to this question isn’t as easy as you might think. To make an informed decision, you’ll need to take a few things into account first. Read on to learn more.
It makes sense to pay more for …
Top talent. Above-average pay and benefits tends to attract above-average workers who’ll be more productive than workers hired at lower wages. Companies operating under this pay philosophy view top wages and benefits as an investment that will pay for itself again and again over time.
Of course, there’s always the risk of making a bad investment. That’s why good processes are important. The company must define top-tier talent and have a recruiting process that identifies such candidates. At the risk of stating the obvious, it’s a bad business decision to pay above-average compensation only to wind up hiring average or below-average talent.
Highly leveraged jobs. It makes sense to pay more for core positions that bring the most value to your organization. Executives and other senior leaders are an obvious example, but other jobs will vary from industry to industry. Following this strategy also means avoiding the temptation to overpay high performers in non-core positions. Instead, develop these employees for bigger and better within your organization.
Compensation checks and balances
Do these two things to ensure the most bang for your buck.
Regularly review wage data. Staying on track with your pay philosophy means staying informed. An excellent way to determine the right time to offer higher compensation and benefits is by checking wage surveys for your region. Consult wage surveys that are accurate and respected in the industry, like those found at PayScale. Wage surveys will give you a better understanding of what comparable jobs are paying in your industry and in your region.
Create a stronger vetting process. If your company decides to offer higher compensation and benefits, it’s also a good idea to create a stronger candidate vetting process, because a reputation for paying more can lead to greater numbers of “vulture” candidates applying for your open jobs. Vulture candidates are attracted to your high wages more than anything else about the job and ultimately are looking to take more than they give. If hired, these employees might not perform to the standards your company requires.
In certain circumstances, it makes good business sense to offer higher compensation and benefits for the best talent available within your company’s industry. Consider whether the time is right and then make an informed decision before starting the search for your next new hire.