The recruitment process can be grueling in a competitive market where the demand for top talent is just as high as the skills gap. Finding employees with the qualifications you need before other companies can hire them out from under you can prove to be the most challenging part of the onboarding process. An effective solution to this problem could be to offer your candidates larger starting salaries in comparison to your competitors, but does this strategy take away the incentive to do good work?
Salary Comparison a Key to Competitive Compensation
Salary comparison is a common tactic and strategy for companies looking to stay competitive in their pay rates and compensation whether they be hourly or salary. Hiring managers and HR must do extensive comparison research of pay rates as well as benefits and company perks in order to make sure that starting pay rates keep employees productive, fulfilled and engaged.
There is no denying that how well you compensate your top employees has a direct impact on their work performance, but few leaders have figured out the optimal comp strategy to keep employees motivated from day one and onward. Too high of a starting salary could lead to a lack of motivation for career advancements, but too low and you may not snag those better hires in the first place.
So, what’s in it for your business if you do start to make more generous starting offers? Here are three things to consider:
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- Performance. Many entry-level positions are client-facing roles. Depending on who you hire and how you compensate them, these are the employees that have the potential to make or break the reputation of your company. New employees who are generously compensated will have a higher level of job satisfaction as well as greater determination to work hard for your company. The return on investment here is an overall better customer experience, and therefore the company’s development as a whole. Not only will this benefit your business in terms of sales, but you can expect to see an increase in brand recognition which will help you to continue to attract great candidates. Another point to bring up here is that strong organizations rely on consistent hard work from employees in order to stay competitive in the market. A larger starting salary could be the incentive that some new employees need to hit the ground running.
- Work-life balance. An additional reason to consider making more generous starting offers, especially for candidates from the newer generations, is that a larger starting salary is more attractive to the up and coming work force. In the past, people were more likely to be satisfied by working more and getting overtime pay. While this strategy may have been acceptable to workers from earlier generations, Generations Y and Z, favor a better work-life balance instead of long hours in the office. Many employees from the newer generations would much rather work harder for fewer hours, but for more pay. A larger starting salary gives new employees the opportunity to do their best work with the motive to benefit the company rather than fighting for a higher salary so they can pay their bills. This type of motivation is what will ultimately lead to your company creating a more motivated and harder working team.
- Sense of belonging. One of the most important reasons to offer candidates a generous starting salary is to provide them with a sense of belonging and importance as a member of your team. A business that offers more than just the minimum salary is sending the message to employees that the company they work for is in good standing and values them.
Your employees need to know how important their contribution to your company is from the first day that they step in to your office until their time working for you comes to an end. Regardless of whether or not you decide to start making competitive salary offers and do your comparison salary research, the bottom line is that employees need a transparent salary policy that reflects that their employer values their contribution as a team member. The standard rule for making offers that are competitive in comparison to the market is to offer a starting salary that is 2 to 5 percent above what other companies are proposing to the same candidates. You should keep in mind that the more qualified a potential employee seems, the harder they will be to win over. Getting pay right from the start is a win for both you and your employees.