If you’re making compensation decisions based on national norms, somebody could be coming up short … and it might be you! Here are the criteria you should be using.
You’re hiring a payroll clerk or an engineer … or even an HR manager. How much should you pay?
If you make that decision on the basis of the broad national averages put out by the Bureau of Labor Statistics, you could be making a huge mistake, say the compensation experts at BLR. It’s the kind of mistake that, if you’re paying less than you should, can cost you your best employees, lost to competitors. What if you’re paying more than you should? Well, your Accounting department can start ordering red ink in bulk right now.
Ideally, you should base your pay on what your competitors are offering, but don’t expect them to tell you. Even their job ads may not be representative of what their final offers contain. Instead, say the experts, base your decision on these factors:
Your State: Just as in real estate, money decisions need to be based on location, location, location. A clerk on Manhattan Island in New York has a far different cost of living than one in Manhattan, Kansas. Compare your offers with others in your state, not in the nation.
Your Company Size: If you’ve got 100 employees, don’t compare what you offer with corporate giants who have 100,000. They can spread the overhead in ways smaller companies can’t begin to imagine.
Your Industry or Business Sector: Supermarkets operate on a 1 percent gross margin, some high-tech firms make 30 percent or 40 percent. You need to compare compensation and benefits for any given job with a like job in companies with similar economic profiles.
Profit/Not-for-Profit Status: This one is obvious. Not-for-profits, such as social service organizations, simply don’t have the budgets to match the offers of for-profit companies, and should never compare with them.
There are several commercially available programs that take such factors into account. Ours is called Employee Compensation in [Your State]. It’s been honed and refined for 2 decades and is well proven. Based on thousands of surveys sent to employers each year, the data will give you detailed answers to your compensation questions in seconds.
One example: the question we started with …. what to pay an HR Manager. Typical answer using the data in a recent edition of Employee Compensation in Florida:
HR Manager (Grade 38) – Mid-Sized Manufacturer – Florida:
Minimum: $43,782
Midpoint: $58,377
Maximum: $72,971
One word of caution: Comp and benefits data can become stale faster than milk on a supermarket shelf, so if you consider any of these programs, updating is crucial.
Employee Compensation in [Your State] sends you update pages six times a year, at no extra cost. The program also includes three annual survey report books (exempt comp, nonexempt comp, and benefits) and a monthly newsletter. And the basic book contains summaries of state and federal law on 69 compensation-related topics, such as FLSA, ERISA, and COBRA, along with a tutorial on setting up a best practices comp program.
The link below lets you do a no-risk evaluation of Employee Compensation in [Your State] in your office for a month at no risk. We urge you to take advantage of it.
To order Employee Compensation in [Your State] at no-risk, click here.