Salary evaluations help ensure that the wages you pay for each position in your company remain competitive with salaries of other firms in your industry and geographic area. Performing evaluations regularly can help you keep the people you have as well as recruit new talent.
Here’s a look at some frequently asked questions about the salary evaluation, along with more information about how the process can help you prepare to hire for future roles at your firm.
Who handles the salary evaluation process?
This depends on the size of the firm. In larger organizations, the human resources department usually takes the lead. And in small businesses, managers are typically responsible for setting salaries for their staff.
When should you conduct a salary evaluation — and why do it regularly?
Many firms do salary evaluations in conjunction with annual budgets and performance reviews, usually separating the discussion of pay changes from feedback about the worker’s on-the-job contributions.
Regularly conducting salary evaluations can help to fortify your company’s retention efforts. Money remains a major a factor in employees’ overall job satisfaction. As your employees gain experience — and meet or exceed performance expectations — they want to feel the company is compensating them appropriately. Keeping your best is especially important in a talent-scarce environment when new hires ask for, and often get, ever-bigger salaries.
A regular salary evaluation can also uncover other important information, such as if you’re overpaying for certain positions.
What resources should you reference when setting salaries?
The Occupational Outlook Handbook from the Bureau of Labor Statistics can also be useful. It includes wage information and other details for a wide range of jobs. You might check out your competitors’ websites and online job boards, as well, for positions in your industry and region.
What else should you consider when setting salaries for employees?
Getting the salary baseline is important. But wages aren’t the only thing to weigh in your overall salary evaluation. Also factor in employee benefits and perks, vacation time, 401(k) matches and bonuses.
In addition, our Salary Guides can help you learn about the top hard and soft skills companies vie for when hiring. These are the qualities and abilities that demand the highest salaries, key information for you when setting or re-setting your compensation levels.
Remember, too, that job duties can evolve and expand significantly over time. The Robert Half Salary Guides list salaries in percentiles, from entry-level to positions of greatest responsibility. When setting salaries for employees, state compensation for each role in a range rather than a specific amount so that you can factor in these variables.
Anecdotal information can also be valuable sometimes: When team members depart your organization, conduct an exit interview to gauge whether or not they felt fairly compensated. Consider that feedback when determining the salary level you will advertise for the open role.
How can the salary evaluation process help your business plan for the future?
Not only do salaries for a job change over time based on the incumbent’s experience level, but the market value of some jobs can also change quickly — especially in this era of rapid technological innovation. As the Jobs and AI Anxiety report from Robert Half explains, businesses’ growing adoption of new technologies, like robotic process automation, cloud computing, and artificial intelligence, is not only transforming existing roles, but also creating entirely new professions.
Many of the jobs needed in the future workplace will require broader skill sets. They also will demand higher levels of compensation, experts quoted in the report predict. So, as an employer, you’ll want to pay close attention to how jobs are evolving in response to technological change. You can also use a salary evaluation when setting salaries for new positions you’d like to add to your team, including these emerging roles with new skill sets.
The depth of knowledge of various new technologies required will vary from department to department in a company. While your business may not need to hire an AI specialist such as a programmer or engineer, for example, you may need to recruit a finance professional who has worked with AI and can identify AI use cases for the business.
The salary evaluation process at your firm should be ongoing but never routine — meaning, it always requires focused effort and thoughtful research. Remember also that evaluations of some jobs at your company may indicate that the role, though important, doesn’t need a full-time occupant. Adopting a flexible staffing strategy and using highly skilled temporary professionals allows you to tap specialized resources for these tasks without the cost of a permanent employee.