September 5th, 2018
Payroll day…every small business owner’s least favorite day!
Complicated, confusing, yet important and mandatory. Yet setting initial salaries can often be the most stressful part of this process.
There are some across the board tips that can help a small business owner when setting up a pay scale for employees, and for themselves as the business owner.
It starts with the typical argument- hiring the best means paying the most. So what do you do?
You want to recruit strong, knowledgeable candidates, but that means you have to offer competitive wage. As a start-up, this can range from difficult, to impossible.
Number one rule of them: never pay more than the job is worth. When we say worth, we mean how much is this skill set worth to your business in particular? If you have an accounting background (rusty as it may be) perhaps you can manage without one for the first year, freeing you up to fill a more pressing position.
Figure out the most and least you are willing to pay for each desired role and go from there, now you have a scale that can be applied to applicants and their relevant qualifications.
Speaking of qualifications, remember that salaries should always be based on merit and qualifications. Bottom line, more experience = more money. Be wary not to short-change those with years of industry experience, word gets around!
Assess the competition, find out the industry standard and apply these to the current market conditions.
Seemingly a simple process, deciding on pay structure can often be the most complex. Will you pay hourly, salary or commission based? This is where a deep assessment of your industry standards will come into play.
Hours worked, scope of responsibility, experience, goals, expectations and complexity should also be assessed and applied to the decision making process.
When determining compensation, even at the most basic level, always consult with your legal advisor. Provincial and federal laws, plus union determinations may affect what you can and cannot do, depending on your industry.
You want to remain fair, but competitive; attractive yet affordable; legal yet do-able!