Hiring a new employee, regardless of the position, can bring forth a variety of questions. This includes how much you should pay the person, how you will handle their payroll taxes, what his or her responsibilities will be, and how you will train him or her in an efficient manner.
For the sake of this article, we are going to focus on this one question: what is the best practice for setting new employee salaries?
Look at the Past for Guidance
First and foremost, you should pull from past experience to help you answer this question.
If you have set salaries for employees in the past, you have an idea of how to approach this in the future.
For example, if you previously hired a sales representative at a salary of $75,000 per year, you have solid ground to stand on as you move forward. You may not pay the next person in this position the same amount, but it will at least give you a starting point.
Are you a new business owner? In this case, you may be hiring your first employee (or group of employees). In other words, you don't have any experience to fall back on. In this case, search online for salary related data. What are other companies in your industry paying? What is the average salary in your area? Referring to salary websites, as well as online job boards, can provide you with the information you need to get started.
Don't Break the Bank
You can only afford to pay out so much money in salaries. If you get ahead of yourself, you may find your payroll exceeding your profit (and that is never a good thing).
So, before you make a new hire, be sure you fully understand how much you can afford to pay.
Tip: some employees, such as sales people, will help you generate additional revenue. This can offset his or her salary.
There is no hard and fast rule for setting new employee salaries. The best thing you can do is take guidance from your past, review your financial situation, and hire workers that will add value.
Remember, with each new hire you will become more and more comfortable setting salaries and taking on related challenges.