Hiring your first employee or your ninth employee can be just as stressful if you’re looking at a new position. What employers are always worried about is how much should I pay my employees and can I afford it.
Answering these questions is straight forward if you follow a few steps to gauge where your business is, what the employee will be doing, and what that job is typically worth elsewhere.
Figure Out Your Budget
The first step to figuring out the question “how much should I pay my employees” is if the money is there. You may be in a place where you feel that you need an employee in order to give yourself more time to expand the business.
The most important thing you should be asking yourself though is what you can afford to pay that employee. The average salaries or figuring out the exact cost of that type of employee is second to the budget.
A great tool to help you identify your budget is having a great pay stub maker. It helps fill in the gaps when you need to.
Knowing your budget lets you know if you should be hiring an employee part-time, providing more benefits to offset the pay decrease, or hiring a less experienced employee to match your budget. Where the money is coming from is always the first step.
Create a Job Description
Creating a job description helps focus your efforts on who to hire and how much they’re typically worth. Write down all the responsibilities you’d expect this employee to have and then ask yourself “what would I want to be paid.”
This is a quick exercise that helps you narrow down quickly the type of work the employee will be doing. Then you can find other job postings in that field to compare what you felt they should be paid.
Knowing what the employee will be doing is an important step in determining their value to your company.
Research Average Salaries
The internet is a wonderful thing with seemingly infinite information. The Bureau of Labor Statistics always has up to date information on the average salary for set positions. You also have job listing sites like Linkedin to see what people are offering their employees as salary.
If the internet isn’t your favorite, what has always worked is asking other people in your industry what they pay their employees. Business owners stick together and have a fierce loyalty to helping others succeed.
This makes for a helpful network of people that can tell you what they pay their employees or what they’d want to be paid.
How Much Should I Pay My Employees?
The industry, what the employee is doing, and what the business can afford are all important questions to ask when answering this question “how much should I pay my employees.”
Once you’ve figured out this information though, it will tell you exactly how much that employee is worth and how much you can afford. Once you have the employee hired, you can gain their feedback on how much they’d want to be paid in the future.
If you’re interested in any of our other articles, feel free to look around! We have a ton of great content that’s just waiting for someone to use it and educate themselves.