Criteria for Fixing Salaries and Wages

Posted by jeenniwill on June 28th, 2018

When determining the salaries and wages that will be paid by your organization, it is essential to know the economic conditions of the region in which you work the pool of potential employees and the legislative requirements in effect.

Also, to establish what will be paid to an employee, you must first weigh up his or her role within the organization. Then, at the time of hiring, one must take into account the skills and experience of the employee for the position, which may have an impact on the level that will be assigned to him in the salary range.

Establishment of remuneration

In many situations, you will need to decide how much compensation to pay an employee and for that following employee compensation plan is vital, for example to:

• A new employee
• One of your employees to whom you must offer a salary increase
• One of your employees who will assume a new role
• One of your employees who is valuable to you and who plans to leave you because of pay
• Market conditions
• Rare skills

It is vital to ensure that the chosen approach respects your compensation philosophy and is applied consistently. Following the established guidelines executive compensation programs private companies will prevent you from offering compensation or conditions that are overly tailored to a particular person, which could put the organization at risk because of excessive financial burden or working conditions.

To create a good compensation structure, a balance must be struck between organizational needs and employee considerations.

Approaches and techniques for setting the base salary

The setting of base compensation is directly related to your philosophy of compensation. To determine your base salary, you need to understand the role of the incumbent within your organization (including the complexity of responsibilities and tasks assigned to them) as well as market data and comparisons.

Organizations that take the time to make sure that they have taken all of the following into consideration may be more externally competitive while internally ensuring consistency and credibility. For that, they should consult companies like executive compensation consulting in California.

Revise salary scales

Salary scales are useful when you are seeking to standardize your organization's compensation practices, as they reflect job classes based on their relative value. Typical scales may include several levels or levels, wage classes or job families, with minimum or maximum wages. It can be an hourly or annual wage.

Several levels may exist for a role or types of interrelated tasks, and each level is associated with a monetary value (in dollars). The creation of salary scales is based on internal or external data.