Attracting and keeping employees is always challenging for small businesses, but the economy has the potential to make it even more difficult. 2023 kicked off with the lowest national unemployment rate in more than 50 years, and it’s remained relatively low since. With so few people actively looking for work, employers across the country are scrambling to make jobs more attractive to jobseekers. They’re also trying to find ways to retain their existing employees. One critical thing for business owners to keep in mind is that employees typically need to be paid a fair salary in order for them to remain happy with their job, and this is especially true during times of high inflation.
Here are four tips to help ensure that you’re paying your employees a fair wage:
1.) Do a Budget Deep Dive.
Before you can determine what constitutes fair pay for your employees, you first have to understand your employee compensation budget. This line item is most likely your largest budget expense. Having a dedicated employee compensation budget allows you to better understand what you can afford to pay in terms of raises and bonuses and can give you an idea of whether you can afford to hire additional employees now or in the future.
2.) Review Your Job Descriptions and Compare with Similar Job Postings.
An accurate job description can help you determine what to pay your employees based on the work they complete for you on a daily basis. You should ensure that each of your employees has an accurate job description. It should include the core duties of the job as well as the skills and level of experience required. Job descriptions should be detailed enough that a potential applicant would understand what they are applying for. Not only will having an accurate job description come in handy if an existing employee decides to leave, but it can be helpful in determining whether you’re currently offering a fair wage for the position. Looking at similar job postings online can help you gauge what other companies are paying for similar roles.
3.) Research Average Pay in Your Industry and Location.
It’s important that you understand the average pay for employees in comparable roles in your specific industry. Internet research is an effective way to determine salary benchmarks. Websites like Indeed.com, LinkedIn.com, Glassdoor.com, and Salary.com, can provide helpful information about salaries across industries. In addition, the U.S. Bureau of Labor has a webpage that offers statistics on the average pay rate for different industries.
Where your business is located also impacts the average salary for a specific job. In areas with a high cost of living, a job might pay more than it would in a less expensive area. So, if there are two people doing the same job in two different locations, the average pay will likely look different. Talk to other business owners in your area and industry to get an idea of what they’re paying for similar jobs, or utilize recruitment firms and online resources to understand the local market for your specific positions.
4.) Outline Your Expectations.
Usually, job seekers have an idea of what they should be paid. For this reason, it can be a good idea to offer a salary range when you post a job, so that you don’t waste time interviewing candidates that you can’t afford.
It’s also important to set proper expectations with your existing employees. Let them know when salary reviews will take place, and when bonuses might be awarded. If you offer an annual cost-of-living raise, make sure your employees know that so that they can look forward to getting a bump in their paycheck.
Everyone has the right to make a fair wage. Most of us rely on our weekly paychecks to pay the bills, save, and work towards financial goals. The past couple of years have seen record spikes in inflation, and you likely felt the pain as a small business owner. As difficult as cash flow can be during periods of high inflation, it’s essential to support your employees with fair salaries. By having open and honest conversations with your employees regarding pay, you can help keep them happy and content in their roles. Most experts agree that the cost of retaining an existing employee is much lower than the cost involved with hiring a new one.
If you are a small business owner in Massachusetts or Rhode Island, don’t hesitate to reach out. We have various solutions to help make it easier to operate, manage, and fund your business.