Determining the Rate of Pay
Determining how much you should pay for a particular job is not easy. A number of factors need to be taken into consideration. Some of those are:
- The level of responsibility in the company – is the position a key one?
- Education levels and years of experience of the person being hired.
- The going rate for this job in this area. Are you losing employees to other companies who pay more?
- The going rate in other provinces. Are people leaving to go there? What would you need to pay to keep them here?
- What rate of pay should be assigned to this position when comparing to other positions in your company
- Your compensation strategy. Are you trying to stay in line with other companies, pay a little more to attract more qualified employees, pay a little less because you are not as equipped to compete, etc.
The next sections provide you with tools to assist you in calculating the going rate and in comparing the rate of pay with other positions in the company.
Remember, a new employee doesn’t need to start out at the base level if their skills and education reflect a higher or lower level. Some companies start new employees at 90% of the fair rate for the position, and then increase their rate of pay at the end of the probationary period or after some other specified period. That gives you some room to move. You could also start the person at the mid-point or some other place on the scale if the person will not require much in-house training.