You know the position. You know the requirements of the role. The next thing you need to know: are you paying enough?
Gauging the correct salary when advertising a job is never easy. The market can fluctuate according to industry, location and a whole host of other market forces.
To help you keep focused on the factors that matter most, here are five ways to help you feel confident you’re offering the right salary.
1. Check the competition
If you really want to attract the best talent, it’s important you know exactly what and who you’re up against. Failing to keep up with the competition may mean you miss out on the highest quality candidates. You’ll also run less effective recruitment campaigns, and spend more time recruiting, both of which could cost your business.
Run regular searches for similar job titles to make sure you have an up-to-date benchmark of what the market’s doing.
Should you attract a candidate that meets all of your main requirements, you may also need to be prepared to negotiate. They may be seeking more than you have previously offered, and leaving a little room in your budget to reflect this is always advisable if you want to avoid missing out.
2. Keep up-to-date with industry trends
Although linked to the previous point, it’s worth noting that salaries by both industry and location are dynamic, and are likely to fluctuate depending on a number of different factors. As well as keeping an eye on what your direct competitors are offering potential employees, maintaining an awareness of the standard rates for your area and sector should always inform your decision.
To see how the salary for your vacancy compares with similar jobs, use reed.co.uk’s free Salary Checker.
3. Consider the cost of living
The majority of locations will have an average salary dictated, at least in part, by the cost of living. The cost of living in London (ranked by Mercer in 2012 as the 25th most expensive city to live in), for example, would be much higher than that of Birmingham, Glasgow or Edinburgh (all outside the top 100).
However, although many of your staff might live in and travel from the same area, for certain positions you may have to look slightly further afield.
If you’re looking to fill a more niche or specialist role than your local catchment area will allow, be prepared to pay a little extra, or even subsidise travel to find the perfect hire.
4. Bring on the benefits
If you’ve stretched the salary as far as your budget will permit, there’s a range of other ways you can attract the best candidates. Other than the annual wage, an attractive benefits package can also be an eye-catching incentive.
Aside from the obvious perks (company car, bonus/on target earnings and the aforementioned travel subsidies etc.), there are a number of other things you may be able to offer to start generating the right applications.
Examples might include pension schemes, health insurance, extra holiday days, working from home allowances and gym membership.
5. Remember the hidden costs
When considering the correct level of salary, it’s just as important to make sure you’re not paying too much. Remember, you’re not only paying a new employee’s wages. There may be a wide range of other expenses which need to be taken into account when allocating your budget.
Potential costs include software licensing fees, money provided for training, office space, office equipment, utility bills and even liability insurance. The general rule is, whatever the annual salary, a company will usually pay 50% more per hire when all the overheads are taken into consideration.
If you don’t have budget for the added cost, you may need to re-consider the scope of the vacancy or adjust your offer accordingly before advertising.
Of course, calculating salaries is largely circumstantial. There will doubtless be many other mitigating factors (budgetary constraints, opportunities for career progression etc.) which inform your decision and which are dictated by the individual needs of your business. Regardless of this, you should always make sure you’ve done your research before deciding on a final figure.
Finally, if you’re setting about your recruitment without giving a fixed salary figure (i.e. ‘competitive salary’), always consider doing so with a degree of caution.
Recent research conducted by reed.co.uk showed that, on average, jobs that don’t display a salary or leave the salary as ‘negotiable’ receive fewer applications than those that do, and some candidates may be reluctant to apply if they can’t immediately see their earning potential.