How to Set the Right Salary: A Strategic Guide for Hiring Managers
Setting the right salary for a position is one of the most critical decisions a company can make. Offering a competitive salary helps attract top talent, retain employees, and maintain a positive company culture. However, determining the right salary isn’t just about choosing a number—it requires research, strategy, and alignment with both market trends and business objectives. In this blog post, we’ll walk through key factors to consider when setting salaries for different positions.
1. Research Market Trends and Industry Standards
Before setting a salary, it's essential to understand what similar positions in your industry and location are paying. Salary expectations vary based on industry, job role, and geographic region.
How to Research:
Use salary data from sources like the U.S. Bureau of Labor Statistics, Glassdoor, LinkedIn Salary Insights, and Payscale.
Check industry reports and compensation surveys to get up-to-date insights.
Network with other professionals or recruitment firms to gauge salary benchmarks.
Example:
A mechanical engineer in a major city may command a higher salary than one in a rural area due to cost of living and demand differences.
2. Assess the Role’s Responsibilities and Required Skills
Not all job titles are created equal—two companies might have the same position title, but the scope of responsibilities and required expertise can vary significantly.
Key Factors to Consider:
Experience Level: Entry-level, mid-level, or senior roles all have different pay expectations.
Skills and Certifications: Specialized skills or certifications often warrant higher pay.
Job Complexity: More complex roles requiring leadership, project management, or strategic decision-making should be compensated accordingly.
3. Consider Geographic Location and Cost of Living
Location plays a major role in salary determination. Employees working in high-cost-of-living cities require higher salaries to maintain the same standard of living as those in lower-cost areas.
Example Salary Adjustments:
A sales manager in New York City will likely earn more than one in a smaller city like Tulsa, Oklahoma.
Remote positions may have variable pay scales based on the candidate’s location.
4. Benchmark Against Internal Salaries
To ensure fairness and maintain internal equity, compare salaries across similar roles within your organization. If employees in similar roles have vastly different salaries without justification, it can lead to dissatisfaction and turnover.
Tips for Internal Benchmarking:
Create salary bands based on job levels.
Regularly review pay structures to address discrepancies.
Ensure pay is consistent with experience and performance levels.
5. Factor in Benefits, Bonuses, and Perks
Salary isn’t just about base pay—benefits and perks also contribute to total compensation. Candidates may be willing to accept a slightly lower salary if your company offers attractive benefits.
Compensation Elements to Consider:
Bonuses & Incentives: Commission structures, performance bonuses, and profit-sharing.
Healthcare & Retirement Plans: Competitive health insurance, 401(k) matching, and stock options.
Work-Life Balance Perks: PTO, remote work options, flexible hours, and wellness programs.
6. Work with a Recruitment Firm for Hard-to-Fill Roles
For positions that require specialized skills or are in high demand—such as engineering, industrial sales, or technical roles—partnering with a recruitment firm can help determine competitive salary ranges and attract top talent.
How a Recruitment Firm Helps:
Provides access to salary insights and market trends.
Identifies top candidates within budget constraints.
Helps structure salary packages that align with both candidate expectations and business goals.
7. Adjust for Experience and Negotiation
Not all candidates will require the same salary offer. Experience, unique skills, and negotiation abilities can impact final salary decisions.
Best Practices:
Set a salary range rather than a fixed number to allow room for negotiation.
Consider non-monetary compensation if budget constraints exist—extra vacation time, stock options, or signing bonuses can be appealing alternatives.
Remain transparent about salary expectations during the hiring process to avoid misalignment.
Determining the right salary for a position requires a balance between market data, internal fairness, and business strategy. By researching salary benchmarks, evaluating job responsibilities, and considering total compensation, businesses can set salaries that attract top talent while maintaining financial sustainability.
Need help setting competitive salaries & finding your next hire? Contact us to learn how we can help you attract and retain top talent in today’s competitive job market!
