How Much Should You Pay Your Workers?

Michael Giuffrida: How Much Should You Pay Your Workers?

If you run a business or are in charge of compensation at your company, you have no choice but to learn how to properly pay an employee. Of course, the process is much more complicated than simply printing a paycheck, according to human resource expert Michael Guiffrida. Here is a glimpse at what you need to consider when putting together the right compensation plan for your workers.

One of the most important things you can do when creating a worker compensation plan is to determine your company’s pay philosophy. This includes determining not only an appropriate compensation amount for your workers but also how you wish to handle factors such as performance bonuses, benefits, gym memberships, free lunches, and incentives. For example, maybe you like the idea of incentivizing performance, so you opt to provide smaller base salaries and more in the way of performance bonuses.

Once you have your pay philosophy down, you need to find out what other companies in your industry are paying. In other words, it’s time to do some reconnaissance on your competition. This is possible by talking to industry professionals, searching for online salary surveys, or using online salary calculators. Based on the information you discover, you’ll need to figure out whether you want the wages you pay to be higher than your competition’s or lower than it.

Finally, you can establish your hourly pay rate or salary. Note that conventions regarding pay vary based on position and industry. For instance, although store cashiers and restaurant waiters generally receive hourly pay, restaurant managers likely don’t. In the same way, salaries might be more fitting for marketing associates or writers for print publications.

When it comes to benefits, consider offering retirement plans, vision and dental insurance, life insurance, and even tuition reimbursement along with competitive salaries. The perfect balance of salaries and benefits will motivate your employees to stay with your firm and still enable you to be fiscally responsible to your company.