Salary Negotiation With Employees: Fair P(l)ay

In this time and age of sky rocketing wages, benefit packages, paid holidays, so on and so forth, attracting and retaining talent has become more challenging than before. Large corporations have a gazillion offers to please their employees, but what is a start up to do? Smart salary negotiation with employees could be your answer! Keep a couple of things in mind and you could hire the best in the industry at very affordable rates!

When it comes to salary negotiation with employees, important considerations include setting salaries in accordance with industry standards, adopting suitable negotiation strategies, evaluating the impact it has on current and future salary structures ….it’s a long list. Our checklist should help you get a grip:

Set a ceiling: Figure out how much you can spend on salaries. This will become easier once you have a general idea about your expected revenues and expenses. Setting a ceiling before you start salary negotiation with employees will prevent wasting time on candidates who are too expensive.

Set a floor: Figure out the least amount that you will have to pay out. This is quite often the ruling market rate. You could find this kind of information on the internet, the chamber of commerce closest to you or better still, others in the business. Do this for every opening to get a fair idea of what each job is worth.

Hourly or monthly? The next step forward is to decide how you will make the payment. Payment on an hourly basis is best suited for temporary workers while a fixed monthly salary is probably what white collared employees expect. Both options have different implications. Monthly salaries imply a fixed payout irrespective of the number of hours put in. On the other hand, hourly pay scales mean that you will have to pay for overtime, often at a higher rate. If you have sales persons working for you, offering a target linked commission is a useful method of remuneration. In such cases, the basic pay could be low but see to it that for every successful sale, the employee takes home an attractive incentive. Do whatever you can to keep your employees’ morale high.

Make it attractive: Salary negotiation with employees need not only be about monthly pay packets. You will manage to attract good talent even if your offer isn’t to die for, provided you make up for it while designing the benefit package. Benefits typically include bonuses and other allowances. You could either tie them to specific projects or conduct periodic appraisals or better still, do both. You could even offer employee stock options if you foresee your company growing rapidly.

Avoid legal tussles: Surely you would fight for your dues, if you were working for someone else, right? Expect the same from people you hire. There are federal laws in place to address grievances as well as stipulated minimum payments that employees must be given for working overtime. The laws are elaborate with several exemptions, so familiarize yourselves with them before you decide on what and how you pay your staff.
“Workers Compensation and Employee Protection Laws in a Nutshell” by Jack B. Hood, Benjamin A., Jr. Hardy, Harold S. and Jr. Lewis,
could help you on this turf.

Be sensitive: Win your employees over! Keep their personal needs in mind before you offer a laughable compensation package. When you hire part time employees, for instance, if they happen to be mums working in their free time, you need to pay them well enough to afford a day care service.

“The Employer Brand: Bringing the Best of Brand Management to People at Work” by Simon Barrow and Richard Mosley, is a must read for first time employers. “The Startup Company Bible for Entrepreneurs” by Michael Stathis, can guide you through starting out on your own.

The process of salary negotiation with employees will bring about one of the earliest interactions with potential candidates. Hence, try to be as pleasant as possible and take unacceptable demands in your stride. As the head of a start up business, it is important that you do not compromise on the capabilities of your employees; since they will have a very large role to play in the development of the company. A keen eye for talent and business acumen is what it takes to master the skill of salary negotiation with employees.