Friday Focus: Employee Pay
Every employer across the country compensates their employees monetarily. Some more than others, different fields of work require different elements of training, experience and expertise.
The corporate world works to compensate employees with similar job titles and responsibilities regardless of the corporation they work for at an alike manner. Thanks to the open market and competition, companies are able to compete with wages paid in order to do two things: attract and retain employees.
As a small business owner paying a fair salary to your employees is a large part of what makes them work for you. In order to grow and scale your business you must hire, train, retain and replicate that consistently.
There are many factors that go along with this, most important is salary or monetary compensation. Your business can accomplish this in a few ways; choose to pay employees cash on a consistent basis, as most larger corporations, offer them equity in the business, or a combination of both.
While compensation plans can be structured differently, the key here is to not underpay. Underpaid employees feel unappreciated, underappreciated employees leave organizations. Longevity is essential especially when you are trying to grow a small business, if a person feels that they are not being compensated fairly for the work they are tasked to do for your business to make you money day in and day out, they will leave you and it’s not a matter of if, but when.
Offering a competitive and fair compensation package to a new employee or partner is more important for smaller businesses than larger ones, because resources are limited. You don’t have an HR department, a recruiter full-time, training materials, coaching on site as your larger competitors do. Bringing on someone who only lasts a couple weeks or months, thereby forcing you to and recruit someone new again and bring them up to speed becomes a tremendous waste of time and a strain on the limited resources a new business has available, all the more reason to hire right and retain.
How do you know what fair compensation is or looks like for a potential employee? Research your competitors and the current job market, mirror the job roles and positions available and do your best to match the offers. Find out what are the benefits, salary and growth potential that they are offering, then surmise a strategy to best compete. Staying in-touch with the employment marketplace in your industry is essential, as it is ever evolving.
If your business is unable to match a salary for a similar job a competitor is offering, add incentives monetary or otherwise (discounts, sponsorships, or benefits). My personal favorite is to offer some form of revenue sharing, either equity in the whole of the corporation or on the sales, customers or any job-related actions which generate revenue. This can be a great way to keep up and even beat the competition when head hunting. The former is especially effective, as it gives an employee a sense of responsibility and an ability to see the business and its operations from the lens of an owner.
For any business to scale, there need to be partnerships, the best and most valuable are between the owners and their staff. A successful partnership is defined by its longevity; thus a successful business is powered by a long-term, dedicated and cared-for team.
To gain personalized guidance for your business on this topic and others contact us.
- Vince Calace
Founder - Venture Business Development