Your employees likely know what they're worth in today's job market. Do you? A salary evaluation is essential to having the full picture.
You evaluate your employees and communicate with them on a regular basis to ensure they know how they’re performing in their jobs. You may even give them raises for good evaluations. But how often do you assess the competitiveness of the salaries themselves, both for current employees and for positions you’re trying to fill? Here’s the scoop on how — and why — to conduct salary evaluations:
What is a salary evaluation?
A salary evaluation is a process for ensuring the wages you pay are on par with the market. Salary evaluations should be done at least annually. It’s a good idea to conduct them in conjunction with employee evaluations and budgeting.
The human resources department will typically handle the salary evaluations at larger firms. However, it’s helpful as a manager to know what methods and tools HR uses so you can provide real-world feedback to HR if needed. Of course, managers in small businesses often are responsible for the salary evaluations of their own staff.
Why is a salary evaluation so important?
Salary evaluations help you maintain valued staff and recruit skilled candidates.
For one thing, it is good for retention. While money isn’t everything, it’s certainly a key priority for workers. As your employees gain experience, they want to feel they’re earning what they’re worth. Another reason to do a salary evaluation is that the market value of some jobs changes quickly.
Keeping your salaries highly competitive gives your employees an incentive to stay on board. After all, replacing a good employee is expensive because you lose productivity and incur training expenses. Plus, in today’s competitive market, you’ll likely end up paying market value for the replacement.
A salary evaluation can also uncover other important information, such as if you’re overpaying or if it’s time to consider adopting a more flexible staffing strategy.
How do I conduct a salary evaluation?
Make it a habit to regularly review salary data. The Bureau of Labor Statistics frequently releases helpful wage information. The most recent Salary Guides and Salary Calculator from Robert Half are also great resources for salary information. In addition, you might check out your competitors’ websites and online job boards, particularly for positions in your industry and region.
Once you know the going rate for a job, review what you offer and adjust if necessary. When adding salary information to job postings, include a salary range rather than a specific amount so that you can factor in variables such as an employee’s experience.
For existing employees, check their current duties — not just their job titles — to be sure they’re getting a fair wage based on the work they’re actually doing. Responsibilities can evolve and expand significantly over time. When team members depart, conduct exit interviews to gather information about employees’ viewpoints on whether or not they felt fairly compensated.
Getting the salary baseline is important, but keep in mind that it’s not just the wages that need to be considered in your overall evaluation. Factor in benefits, vacation time, 401(k) matches and bonuses, as well.
The bottom line is that salary evaluations can be a valuable tool to strengthen your business. They help you maintain valued staff and recruit skilled candidates. While it may be easy to ignore salary evaluations because of your heavy workload, it pays to make time for them. Use the Robert Half Salary Guides to help you get up to speed on the latest salary trends and information.