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7 Tips for Designing a Super-Competitive Pay Package
With the job market now heated again, many small companies are scrambling to attract workers. Many small firms can’t compete with the salaries offered by their larger competitors.
That said, small companies have their own advantages when it comes to creating a competitive pay package that lures in talented workers. Here are seven tips for designing a super-competitive pay package at your business:
1. Collect salary research
Start by gathering information. You can buy competitive salary survey research through companies like Payscale.com, but you can also try to conduct your own free or low-cost competitive research. The Bureau of Labor Statistics, for example, collects national salary data for more than 1,000 different occupations. You may be able to find more local and company-specific data on sites such as Glassdoor.com and Salary.com, and by scouring local job listings. Local business-networking organizations, such as local chambers, may also help you conduct a salary analysis.
2. Figure out how your salaries stack up
Once you’ve done the research, figure out how your salaries and total compensation packages stack up against your competitors' as accurately as you can. If you determine that, say, you pay 25% or 50% less than your competitors, you’ll want to address that gap by either increasing your salaries or bolstering your employee benefits package in other ways.
3. Find creative and appealing benefits
Small companies can often soup-up their compensation by offering untraditional yet attractive soft benefits. Have a pool table in the break room? Give people Friday afternoons off in the summer? Let people work from home? Host fun social outings? Surveys show that many employees — especially the millennials — care more about the experience than sheer salary. If you make your workplace a more fun and rewarding place to work, talented hires might overlook a slightly lower salary.
4. Offer more paid time off
A 2015 survey of workers by Accountemps, a staffing agency, found that the top thing workers wanted beyond salary was more paid time off (30%). That even beat out receiving better traditional benefits, such as health insurance (26%) and more scheduling flexibility (19%).
5. Get your employees involved
One benefit of owning a small business is that it’s easy to engage your employees in the decision-making. If you’re not sure what benefits they would like or how you could improve their workplace experience, the solution is simple — ask them. Recruiterbox, a software developer in New York City, has a chef on staff so employees can order freshly prepared meals during the workday, according to Monster.com. “They’re here at odd hours. It’s nice they can get something healthy,” CEO Raj Sheth tells Monster.com.
6. Offer equity
You might even take a cue from Silicon Valley. Small companies that can’t pay salaries on par with their competitors may want to offer employees an equity stake, such as stock options or other equity rewards. Not only can equity motivate them to work hard for the good of the company, but it can also pay off significantly — and literally — if the company takes off.
Of course, offering equity is not an easy decision and requires quite a bit of administration. It also means the business owner has to give up some potential upside profit in order to give that upside to the employees, writes Carol Tice on AllBusiness.com.
7. Personalize compensation packages
Small businesses have the ability to really hone in on each individual employees’ needs — and when it comes to pay and benefits, that can be especially powerful. Ask employees and prospective employees what’s most important to them, whether that’s salary or time off, and design a pay package tailored to that employee's needs. That’s something they’re unlikely to find at a Fortune 500 company.
Kelly Spors is a freelance writer and editor based in Minneapolis. She previously worked as a staff reporter for The Wall Street Journal, covering small business and entrepreneurship.