Salary evaluations help ensure that the wages you pay for each position in your company remain competitive with the salaries of other firms in your industry and geographic area. If you expect to keep the people you have and recruit new hires, you’ll need to continually benchmark and adjust your salaries. Performing evaluations regularly is especially critical today when there simply isn’t enough skilled talent to go around.
So, how do you do that? Let’s take a deeper look by answering some frequently asked questions about salary evaluations.
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?
Regularly conducting salary evaluations can help to fortify your company’s retention efforts. Money remains a significant 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?
Robert Half’s Salary Guide and Salary Calculator are great resources for compensation information and insights into the latest hiring trends. (So, too, is our Demand for Skilled Talent report, which we update regularly.)
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 also check out online job boards for positions in your industry and region.
Want details on the methodology behind our Salary Guide research? See this post.
What else should you consider when setting salaries for employees?
Getting the salary baseline is essential. But wages aren’t the only thing to weigh in your overall salary evaluation. More companies are assessing their employee benefits and perks, vacation time, 401(k) matches and bonuses to land and keep valued staff.
Remember, too, that job duties can evolve and expand significantly over time. Establish 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. 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 particular role 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. Businesses’ growing adoption of new technologies enhances job expectations and, in some cases, creates entirely new professions.
Many of the jobs needed in the future workplace will require professionals to have broader skill sets, which will, in turn, demand higher levels of compensation. As employees develop more expertise with cloud systems, automation and artificial intelligence (AI), for example, they will become increasingly more valuable because they can provide greater efficiencies, deeper insights and easier access to company resources for remote workers.
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.
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 salary evaluation process at your firm should be ongoing but never routine, and 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 with the use of highly skilled contract professionals allows you to tap specialized resources for these tasks without the cost of hiring a permanent employee.
Robert Half offers a range of talent solutions to meet your staffing needs. Learn more about our services and browse our job candidates here.