One of the toughest decisions small business owners have to make is how much to pay their employees. Too little and they risk high turnover and low morale; too much, and they’ll never get ahead financially. Calculating salaries is a tightrope walk that few new employers feel comfortable with. Do you know if your salaries are competitive?
Use the right tools
Fortunately, there are a number of readily available tools at your disposal to help you calculate the ideal salary for each employee in your company. It’s important that you use all the resources you can, because your employees are almost certainly already using them, and they know exactly how much they should be making. Start with free tools from the Bureau of Labor statistics like their Consumer Price Index and Employment and Wage Surveys to get a rough idea of the cost of living in your area and average salaries for employees in your industry. For more detailed information, consider using a salary calculator from a site like Salary.com.
When deciding on compensation for each employee in your company, one of the things you’ll want to consider is which positions you’ll want to offer the most competitive compensation. For example, if you’re hiring for a position known for high turnover, you may not want to offer as competitive a salary as you would for an employee with many responsibilities who would be difficult to replace.
Compensate with benefits
If you can’t offer the same high salaries as other employers in your industry, consider making up the difference with benefits. Certain benefits like free parking may not cost you a whole lot, but could make a world of difference to an employee comparing your offer to another. Show employees and recruits how much their benefits are worth through a . Compensation reports clearly and concisely show how your benefits bridge the gap between your offer and the seemingly higher salary at another company.
An exit interview is one of the easiest ways to reduce turnover in your company. It usually takes about 5-10 extra minutes to talk to an employee who is voluntarily leaving, and an interview can reveal information that you’d never learn from your current employees. Most employers who ask the right questions during exit interviews find departing employees extremely frank and helpful.
Even though exit interviews can provide invaluable information, studies have shown that most companies do not have a solid exit interview strategy in place. If you don’t have an exit interview process, follow our simple steps to get the most out of your exit interviews.
- The best time to ask employees the questions you’d ask during an exit interview is when they’re still happily employed. If you learn about problems within your company before it’s too late, you can stop dissatisfied employees from leaving in the first place.
- While some companies give departing employees a form to complete, we recommend a face-to-face meeting. This will produce more honest answers and provides more opportunity for follow-up.
- Make the exit interview comfortable. Employees should know that there won’t be retribution for an honest discussion.
- If the employee who is leaving is extremely valuable to your company, consider asking if there’s anything you can do to encourage him to stay. It can be relatively easy to retain an employee if compensation is his primary reason for leaving.
- Examine all feedback gathered from exit interviews and create policies that address recurring issues. The best exit interview in the world won’t do any good if it doesn’t lead to change.
The following are a few questions you may want to ask during an exit interview:
- What is your primary reason for leaving? Are there secondary reasons?
- Was there one event in particular that made you leave?
- What were the most and least satisfying parts of your job?
- Did your duties meet your expectations?
- Did anyone in this company discriminate against you or harass you?
- What would you do to improve our workplace?
- Were you happy with your compensation?
- Did you feel communication with management was open during your employment?
If you’re looking for more ways to reduce turnover, consider total compensation reports. These reports show employees exactly how much their benefits are worth.