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5 Steps to Help You Decide What Salary to Pay Your Employees

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5 Steps to Help You Decide What Salary to Pay Your Employees

By Caron_Beesley, Contributor
Published: September 23, 2013 Updated: September 15, 2016

If you’re a growing small business and need help, there are a number of non-employee options available to help you staff your business (explained here), but if you do choose to move forward with part- or full-time employees, what should you pay them?

The general rule of thumb is to pay a salary based on experience, location and the available talent pool. But how do you bring all these factors together and come up with a number that potential candidates will find attractive (and you can afford)?

In this quick online video, Brad Farris, a small business advisor and managing editor of (a service of Anchor Advisors, Ltd., a Chicago small business consulting firm), offers some useful tips for helping find a solid pay range to advertise your job and attract strong candidate pools.

Here’s what he recommends:

Have a solid job description

If you don’t know what you’re looking for, it’s going to be really hard to find it. In particular, when you’re looking at pricing a job there is often a wide range of jobs that have the same title. So you need to be really specific about the range of duties and responsibilities of the job.

The problem for many small businesses, as Farris explains, is that they are often piecing together jobs based on the work that needs to be done in the organization, which means that these job descriptions are often for jobs that don’t exist in the real world – which makes it hard to figure out what that job is worth. Farris suggests trying to build a job description that aligns as closely as possible with what other organizations advertise (search online for job description templates). This will make it easier to price the job.

Look around – What is the industry paying for that job?

Do an online search for the job you’re looking to create to try and gauge how the market is pricing that job. For example, search for “social media and content management specialist salary range.” Then narrow your search to your region or city: “social media and content management specialist salary range Boston.” What you’re looking for are local guides or salary surveys that can help you better understand the market for this job in your area.

Next, search trade magazines or sites potential candidates might visit. These often publish their own salary surveys.

Ask around – talk to other business owners what they pay for jobs like the one you’re trying to hire for. Try to compare apples to apples, so get into the specifics of the duties involved.

Conduct advanced searches on job sites

Even after completing this type of research, you may just find you still haven’t found the market guide price that fits your job description. One way to drill down a little more is to query online job sites like CareerBuilder, Monster or Using the advanced search tool, you can really drill down into specific job keywords, categories, (exclude location for now, you’ll come back to that later) that match your needs – and if you can, exclude jobs that don’t show salary information in your search. Your search results will give you a good picture of the current market – what employees are paying, right now, for jobs like yours. Browse the results and search for the job descriptions that best match yours; print these out and narrow down your list to the ones that are the closest. What you should see start to emerge is a salary range – some jobs may have more responsibility, some less – but keep that range in mind.

Do a cost of living comparison

Farris next recommends using a salary relocation calculator (easily found online) to further narrow your search. So, say your printed list of comparable job descriptions includes a good fit but is for a job based across the other side of the country. The cost of living calculator will give you a good indication of what an equivalent job commands in salary in your city or neighborhood, further narrowing the salary range that you had earlier.

Advertise a salary range

Instead of picking a number and sticking with it, Farris recommends keeping that narrowed down salary range in mind, and even including it in your job advertisement (for example, “salary range - $25-30,000 commensurate with experience). Then take a look at some candidates at both the low and high end of the range. Ask yourself if you’d be able to pay $5,000 more to get a candidate with greater skill or experience. If you don’t see the value, then go ahead and hire them at the low end of the range.

The key is to remember that having a salary range gives you the flexibility to bring in a solid pool of talent; then assess individually where they are against the market.

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About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


Great article. I find myself difficult to decide how much i must pay for my employees. I'm a business owner and i always decide based on how much money they can make for me. Sorry for my bad English :)
Besides fair market salary, what I like to do is make my pre-employees take a personality test to see whether they would fit in to the job roles which I am hiring for. Sometimes its not about the money, its about finding the right fit. Thats important.
It is important pay employees on the right rate. Of course it will depend on their experience and expertise. We can also base the rate on their expected salaries.
Hi, How do you factor in benefits into this equation? In other words, how do you position things like health benefits, 401k, etc., when discussing pay with potential employees?
A challenging work environment and a fair management are also some of the things an employee takes into account while deciding between jobs. Often, insurance coverage provided by the Company also makes a difference especially with the challenges faced in terms of battling medical costs.
When I met with a group of small business owners recently, hiring and retaining great talent was one of the top challenges mentioned by almost every group member. Once you find a great employee that fits well with your organization, compensate them accordingly to keep them around.
Good post, as how to decide on salary structure specially for small businesses. It pretty necessary to do market research as how much other companies are paying to their co worker, at the time evaluating candidates experience is an important factor, before negotiating for a salary.
It costs on average $4000 to hire a new employee, when you factor in the job search, training, and administrative costs. You need to make sure the salaries you are offering are competitive not only to reduce turnover (which then requires a new hiring process) but salaries on par with the industry standards are more likely to encourage an applicant to take a job with your company.
I find that it's best to ask prospective employees exactly what they're expecting as far as salary, so as to get both parties on the same page from the start.
Here's a great suggestion having the approximate salary range for the job you're offering, ask the candidate for the salary he expects to have. Depending on the answer, you'll be able to see whether he values his own time/work, and, if he offers his services for your minimum wage - you can bravely give that to him.


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