For Managers: Determining the right salary for your employees

Believe it or not, in Massachusetts (USA) starting from July 2018 it will be illegal to ask the question “What is your current salary?” during a job interview. Hiring managers are required to determine the compensation for a specific job upfront, based on the candidate’s worth to their company, and not based on their previous salary. Will other states in the USA or other international countries follow suit? Let’s wait and see. So how does a company decide on what the fairest salary is for any given job? The following guidelines will help you consider how to determine the right salary for your employees.

How to determine the right salary — from a manager’s perspective

• Assess the position.
  It is of paramount importance to create a detailed job description by outlining all the duties and responsibilities. Then ask yourself the following questions: How much commitment is required? What are the certifications and experiences that are required? What value does it add to the company’s success? How long would it take me to do this job and how much would I want to be paid for it? Thus, make sure you are clear about what the position demands from a candidate.
• Research wages.
  You obviously want to offer your employees a competitive salary. Visiting websites that allow you to compare salaries for different jobs in different industries would be a wise decision. It would give you an idea on how similar the results are that you come across. Last but not least, be aware of what your competitors are paying, so that you don’t lose out on great candidates. Take advantage and check out Experteer’s salary calculator.
• Set financial parameters.
  Be clear about the minimum and maximum pay that you are willing to offer the candidate. However, stay flexible to some extent. Let candidates know that if they perform exceptionally well they will be compensated accordingly. What you will get out of it? You will have a more grateful and loyal employee aboard who will be inspired to perform above average on a consistent basis.
• Other perks?
  Tell the candidate also what the whole salary package includes. Let’s say your favourite candidate has two job offers. Your company states ‘Your annual salary is 45,000 Euro’ while your competitor declares ‘Your annual salary is 44,000 Euro and additionally we are proud to offer you free health insurance, a free designated parking space, gym membership, stock options, a laptop, a company car and free snacks.’ Seriously, which company do you think is your favourite candidate going to choose and perceive as more attractive? I’m sure you got the point!

How to determine the right salary — from a job candidate’s perspective

Imagine you’re currently earning 35,000 Euro and you want to apply for a job that pays you 60,000 Euro. You know that you have the required skills, experiences, qualifications and motivation to take on this challenging new job role. The interview is going fine and then suddenly the interviewer poses the question “What is your current salary?”. What are you going to say? Do you admit that currently your income is considerably lower than what the company is prepared to offer you, or do you take a little risk by inflating your current salary?

If this new law (as seen in Massachusetts’ case) would come into effect also in your state/country, you know that an employer would act illegally when asking you to disclose your previous/current salary. Now if the situation would remain as it is, what arguments would you now use to determine the right salary?

• First of all, do your research and make sure you know your industry thoroughly. Realise what your current worth is in the corporate marketplace due to your qualifications, experiences, skills, knowledge and connections. Check out different online salary calculators in order to get a realistic overview.
• If you will be asked ‘What is your current salary?’ (and you know that there is a big gap between previous and offered salary) be honest and prepared to explain why it should not have an impact on the new job offer. Always bear in mind that you are applying for a new job role at a new company that has its own budgetary guidelines. Your current salary should not play a role since the focus should be on specific duties and responsibilities that you are able to carry out based on your skills and experiences.
• Remember that an employer is always focused on what value the company can gain from hiring you. It does not matter what your personal circumstances are, e.g. travelling long distances, being a parent, having to pay off a mortgage or a car etc. One more time, it’s about the company’s bottom line that matters, the results you achieve and not about meeting your very personal needs. Ask yourself: What difference can you make to the company within a reasonable timeframe?
• Last but not least, don’t accept the first offer straight away without negotiation. Show that you have good negotiation skills. If you are applying for a sales role, those skills will become particularly useful for your company in the long run.

Whether you’re a hiring manager, or a senior-level candidate, knowing how to effectively determine the right salary is crucial. The better prepared and more confident both parties appear and sound during that process, the more successful the outcome will be.

(Original source of my article: https://us.experteer.com/magazine/managers-determining-right-salary-employees/)