There’re a number of factors that determine an employee’s appointment to your organisation, including pay and benefits.This article, written by the MIA’s trusted Business Helpline partner, Croner, aims to answer the question ‘what is a competitive salary?’. It also explores the process of comparing pay packages and the benefits of offering employees competitive pay rates…
A competitive salary is among the top considerations when an applicant is applying for a new position or rethinking their current one.
There’re numerous benefits to offering a competitive starting salary. As well as reducing the costs associated with recruiting and retaining staff, it also contributes to improving morale, loyalty and productivity among employees.
In a previous piece which might be useful, we explored salary benchmarking as well as the process, importance and benefits.
What does competitive salary mean?
It’s offering employees competitive rates of pay.
It means paying your staff members’ salaries that are either at or above the current market rate for employees in similar roles at other organisations.
For example, your organisation hires HR consultants and offers them £35,000 a year although the market average pay rate for employees in that position is £32,000 a year.
In this case, you’re offering a competitive rate of pay as it’s almost 10% above the market rate.
While some job listings may include the employee’s expected pay, a majority of them will either state ‘competitive salary’, ‘negotiable salary’ or ‘DOE salary’, meaning their pay’s dependent on their experience and skillset.
How much is competitive pay?
The amount you offer your employees depends on the current industry standard.
Remember, the way you handle your employee’s pay and benefits package can have an impact on their morale and productivity.
To ensure your pay and benefits are on the right level to attract and retain staff, you’ll need to be able to determine what’s competitive pay for your industry.
The first step to determining this is to calculate the median wage for the position in question. Once calculated, it’ll provide you a clear picture of what applicants will expect.
There’re a variety of salary reports, surveys and benchmarking tools available to make that process a little easier.
Once you’ve got the median wage, you should also conduct some research into what is on offer at other organisations. This way you’ll be able to offer a more competitive salary, meaning pay will be at least the same if not better than the competition.
Websites like Glassdoor and Payscale can serve as great resources for this. You can also use the Office of National Statistics to identify changing trends in wages so that you can stay ahead of the competition.
You’ll then need to place a value figure on the role you’re recruiting for. The value being subjective, this could be hard to calculate.
Remember that salary offers mustn’t be influenced by sex, age or any other protected characteristic as this would be discriminatory.
However, what you can consider are the:
- Duties expected of the employee.
- Their range of skills.
- What their educational background is.
- The responsibilities in their role.
It’s worth considering the value an employee will bring to the business and reflecting that in their pay package.
Croner is here to provide you with competitive salary benchmarking information to help you reduce staff turnover.
As part of your membership with the MIA you can speak to a Croner expert for help with any of the above issues and get free in-depth, tailored advice. Email email@example.com or call 01403 800500 for the exclusive Business Support Helpline scheme number.