As an employer, one of the toughest things is determining how much you should pay your employees. Most people assume you should go for the lowest amount possible, which will help your company save money. However, there are many more things to think about when it comes to deeming how valuable your staff are.
If you pay them too little, then it may be hard to even find employees willing to work for that wage! If you somehow manage to, then they’ll hardly be the most productive and attentive employees as they’re poorly paid.
So, how much should you pay your employees?
Hopefully, these points will help you come to a reasonable conclusion:
Find The Minimum Wage
First of all, you need to find out what the minimum wage is. This will be the absolute lowest you can legally pay them. If you see The Dolman Law Group, then it states there’s a federal minimum wage of $7.25 per hour, but different states may have their own minimum that you need to abide by. So, if you want to avoid getting sued by your employees and ruining the reputation of your company, then you have to ensure you’re not paying below the minimum wage.
Look At Current Market Data
When you’ve established the absolute lowest you can legally go, it’s time to assess how much an employee is worth on the current market. To do this, you have to undertake a fair bit of research into current salaries. It’s not as hard as you think, just choose the job title and look at what other companies are paying their employees in this role. Slowly but surely, you get a good sense for how much a particular employee is worth. This is vital as it essentially means this is how much they will expect to get paid. Any less, and they’ll decline the job offer and go somewhere that pays them the market average at least.
Figure Out Their Worth To You
This is the hardest part as you have to figure out how much an employee is worth to you. The easiest way to do this is by weighing up the cost/rewards. What does this employee bring to your business? Will they help generate a lot of money that more than makes up for their annual salary? If you find that they’re incredibly beneficial, then you can maybe pay them more than the market average. This will result in a happy employee that’s more dedicated to working for you.
Find Out How Much You Can Afford
Lastly, you need to take into account how much your business can afford. This may result in you being unable to meet the high salaries of bigger companies. Don’t worry, as long as you’re paying above minimum wage and around the market average, then you should still find employees willing to work.
Use this as a framework to help decide how much you should pay each employee in your business. Hopefully, it leads to fair pay all throughout the company, with all your team being satisfied with their wages.
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