In designing compensation packages, it is imperative that HR ensure that pay levels are competitive else they may risk losing their key talent to their peers. Besides ensuring pay competitiveness, internal equity and fair pay is also crucial to ensure that employees are remunerated fairly.
One way is to implement salary ranges. Salary structures and range provide guidelines for HR in deciding how much to pay new hires as well as existing employees when it comes to the annual salary increment or promotional increases – all these while ensuring that employee costs are kept within budget.
Here are some ways in which developing salary ranges can help to achieve your HR goals and drive business growth in the long run.
Consistency in hiring
One of the biggest upsides in implementing salary ranges for each position is that it provides consistency when recruiting new candidates. The first step is to identify your talent pool and decide which are key job roles in which you will need to pay certain premiums in order to attract the right talent. Thereafter, it is important to assess proposed salary ranges with other similar jobs in the market to ensure competitiveness. With consistent salary ranges in place for each job position, it reduces the time for HR and managers to decide on an appropriate compensation package, driving internal efficiencies and improving the overall candidate experience as well.
Salary ranges also provide new candidates and employees some form of transparency in deciding the appropriate compensation package. At the same time, it allows both HR and managers to be upfront with new candidates and employees in terms of their future compensation trajectory, ensuring that this is consistency with their peers in similar roles. This helps to build trust between HR, employees as well as their direct line managers, ensuring the compensation is a comfortable topic that everyone is open to talk about.
Minimise pay inequity
Finally, salary ranges can help to mitigate the risk of pay inequality amongst employees. There is no avoiding employees discussing their pay among each other and the worst thing that can happen is when two employees in a similar role find out that their compensation packages differ greatly. Having salary ranges help to minimise the chances of these undesirable situations happening.
There are various ways in which HR can develop appropriate salary ranges, including leveraging on various market sources to identify competitive ranges. While it might take some time to figure out and implement appropriate salary ranges for your employees, it will certainly benefit both HR and your employees in the long run.