Updated: May 25
As leaders, we all hope that staff finds their employees come to work because they love their jobs and that this experience proves richer than the monetary transaction that happens each payday.
But at the end of the day, pay is the main way that we communicate how we value a person's time and effort.
And everyone deserves a fair and equitable wage.
In my experience, the companies attracting top talent are paying above market, mostly because the best employees know their value and hold to it.
But what is a fair and equitable — if not competitive — wage?
This is a tricky question. To find out, we can look to clues such as internal equity and salary surveys, but the answer probably won't be obvious for most organizations.
If you're confused about this topic, don't feel bad: The big companies with HR departments of 50+ have a whole army of people devoted almost solely to defining and evaluating compensation practices!
Most of my clients are smaller organizations that don’t necessarily have a clear compensation plan or might not even have two employees working in the same role, so they wouldn't know how to compare.
I help companies look for those unicorn employees — those critical hires that in short supply. Companies in this position often have tight budgets and may believe they can save money on hiring.
But the truth is that if we don’t nail the compensation formula at the outset, we risk losing the best candidate...or possibly never attracting them in the first place.
Cincinnati City Council just passed a Salary Equity Law which makes it illegal for employers to ask about pay history when interviewing candidates. It is scheduled to go into effect in March 2020 once it has been "passed," but there is still the possibility that it won't go into effect. Philadelphia passed a similar measure that was ultimately struck down by the courts after appeals and protests.
Whether it happens or not, personally I love the spirit of this law since it's founded on two important principles of salary equity:
1. That wage inequity can follow a person through their entire career; and,
2. That pay should be based on the job you do.
Basing salary upon past salary has always been considered a bit shady in my field of work. If a recruiter ever says something like "the market will tell you what the pay is worth," it could be a red flag.
The issue is how do we juggle all that, land the "unicorn" hire, but still stick to an appropriate budget?
Although it takes some prep and planning, I work very hard with my clients and candidates to craft winning deals. Here's my professional recommendation for best practice when it comes to navigating a bias-free offer for a small business position.
(Note: I am not an attorney, so please don't take this as legal advice!)
Formalize Your Compensation Structure
Put each job title in a salary band or grouping. Do some external research to make sure that your bands match up with the industry and local stats. Even free sites like Payscale can give you a pulse on your data.
Start Each Search With a Compensation Target
That doesn’t mean that your unicorn hire isn’t going to desire slightly below or slightly above but be clear on the range so that when a candidate asks, you have an answer.
During your prescreening process, you can ask your candidates, "What is your salary target?"
This is a good way to ensure you aren’t wasting time with candidates that you can’t afford, while still upholding the spirit of the law.
Again, a great candidate will know their worth.
Be Open to Negotiations
Never go below your range. If someone falls above the range but is critical, consider giving him or her a higher role in your organization with more responsibility and bigger pay.
Should you be audited, be able to explain to a third party why this person qualified (degree, years of experience, etc) for this particular position.
Offer Non-Monetary Incentives
Remember, that although compensation is king when negotiating offers, other items can be on the table as well. A reduced schedule or extra vacation time can be excellent bargaining chips as well.
Get a Second Opinion
Annually audit your pay practices by an attorney or other neutral party.
Each search, candidate, and offer is completely different! That is why I love my job and still get excited about it each day.
Whether you work with me or someone else, I strongly suggest you have an HR presence in your organization. Although we might not call it out, we always have the legalities of employment law at the forefront of our minds.
Love HR? Love Small Business? Subscribe to our blog!
The information and materials on this Web site are provided for general information purposes only and are not intended to be legal advice. We attempt to provide quality information, the law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature and may not apply to a specific factual or legal circumstance. Nothing on this Web site is intended to substitute for the advice of an attorney; therefore, if you require legal advice, please consult with a competent attorney licensed to practice in your jurisdiction.