No matter which side of the hiring process you sit on, salary—and how much it should be—is a detail that looms large. As a contractor looking to hire, how do you set a pay range for new hires? How do you know if you’re paying enough?
With the labor market in the construction industry still tight, the salary and compensation packages at your company need to be as attractive as your competitors both inside and outside the industry. Competitive salaries are also essential to keeping existing employees as well as developing strong internal leaders.
How to evaluate compensation
Start with determining where your company ranks when it comes to salaries. Here are a few signs your company’s compensation may be off:
- People decline your offers, or accept them but don’t show up on the first day or leave quickly.
- You haven’t reviewed and updated the company pay scale in two years or more.
- You are losing experienced people to competitors—or even to other industries.
- You include your compensation in job ads and get almost no responses from qualified candidates.
- Recruiters you work with tell you to reconsider your compensation, or never call you back.
If your company is facing these or other warning signs, it’s past time to reevaluate your compensation plans.
How to compare compensation
There are several ways to determine how a company’s salaries and compensation packages measure up to competitors. The best way to begin is to speak with the potential candidates with the experience you want to determine what compensation would encourage them to take a new role.
It’s important to note that in many areas, asking interviewees about salary history is no longer legally allowed, so keep the question focused on the future. Example language could include, “What are you looking for to make a change?” or “What would you expect to earn in a position like this?”
Also, consider reviewing any compensation guides published by industry associations and publications. Keep in mind that you should look at similar roles that may be attractive to your ideal candidates across industries.
A few other strategies for gathering compensation information include:
- Inquire with your local job service about wage surveys or reports for a specific type of job.
- Visit salary.com, a website with basic, free employee reports and options to purchase more detailed reports designed specifically for employers. (Note: The free data for smaller markets is often based on a national average, so look closely.)
- Consult the Department of Labor website, which offers wage earnings and benefits data by area and occupation.
- Consult the Society of Human Resource Management for wage and salary surveys for your local chapter.
- Study similar job postings in your area. Some will include compensation, and if you live in state with salary range transparency laws, job boards will list it.
Finally, keep in mind that people often only get a 2% to 3% annual salary increase when they've been with a company for some time. If people change companies, however, they average a 10% to 15% increase with each move, so they're likely to be more highly compensated than long-term employees.
Rikka Brandon is a nationally recognized building industry recruiting and hiring expert, and best-selling author. She helps building industry business owners and leaders solve their recruiting and retention challenges with strategy, best practices and access to experts. Whether or not you’re looking for in-house training and coaching for your team or an expert to provide consulting, you can learn more at BuildingGurus.com/Informa.