One of the most important things you’ll do as a business owner is building and maintaining your team. The people you bring on board can be critical players in the success of the business. Some of your team members may even become friends over the years. In any case, you and your employees are deeply invested in each other’s success. 

Pay considerations will always be a part of your relationship and your staffing strategy for better or worse. But, let’s be honest, pay conversations can be awkward. And, finding the right balance for pay is difficult. 

The good news is that understanding how to craft a compensation strategy, knowing the prevailing wages for a role, and understanding your personal pay philosophy, can make pay decisions and conversations easier. Because building your knowledge is the first step, the first portion of this piece focuses on pay fundamentals. The second half shows pay ranges for positions often filled by small business owners. Armed with more information about pay levels and compensation strategies, you’ll be ready to determine pay levels for your team with increased confidence.

Compensation Takes Many Forms

When thinking about pay, it’s easy to focus on dollars and cents. While money is a huge part of the pay equation, it’s not everything. Employees consider flexibility, hours, personal time, stress levels, and working conditions when thinking about pay satisfaction.

As an employer, your role is to create a competitive pay package that balances your need for profitability with the desire to attract and retain your staff. 

Market Pay

Market pay is simply the range of pay that a person doing a job generally receives. It considers the skills, training, and experience a worker needs to succeed in a job. Work that requires less training and fewer skills typically pays less than work that requires intricate tasks or specialized knowledge. You can find pay ranges for many of the jobs that small businesses often fill below.

The low end of the range reflects entry-level work, and the high-end connotes experienced workers doing the job. The portion in the middle is called the midpoint. The mid-point of the range assumes an employee of average experience making a solid contribution.

Market pay is generally expressed as a range. Market pay can be viewed as an annual or hourly figure. We focus on hourly rates here, as many small businesses use hourly pay rates, and hourly pay tends to be more common for freelance workers.

Below, market pay ranges are listed by job title, but the title does not always accurately reflect the skills needed to do the job and its tasks. Sometimes titles are minimized or inflated. That’s why it’s best to use tasks to determine pay, not the title.

Incentive Pay

In addition to base pay, many employers offer incentive pay or bonuses at set intervals. For example, an eCommerce company might offer a $50 bonus for any month in which sales goals are exceeded. These programs are often popular with employees and can enhance your revenue considerably while growing employee satisfaction.

Factors that Drive Market Pay

Market pay for each role varies based on the industry, labor availability, and geography. 

Hot industries often experience labor shortages. When labor is short, employers pay more to attract employees. For example, right now, the real estate market is hot, and there’s a great demand for people who have experience with real estate closings. Employers who need additional staff may pay more to find the right people for the job.

Geography is another factor that plays into wages. Because the cost of living varies so greatly across the country, wages vary considerably, too. For example, an office manager in Manhattan will be paid more than an office manager in Sioux Falls, South Dakota, even if the job is the same.

When you hire virtual employees through a partner like HireMyMom, geography is less of an issue because you have access to a national pool of candidates, and wages tend to reflect national trends instead of regional ones. However, if you have an office and want an onsite employee, geographic considerations can be significant.  

Developing Pay Best Practices 

It’s essential to know how much different roles pay, but it’s also necessary to understand how you feel about pay. Developing a pay philosophy for your business will help you frame these decisions in your mind. The first step is considering what matters to you in an employee.

You may decide that you prefer to work with entry-level people to keep costs down. That strategy can work well as long as you don’t mind giving more hands-on support to your team. Also, know that some of the people you nurture along the way may leave for more pay.  

The other end of the extreme is to hire the most experienced person you can find, even if that means paying top dollar. This strategy can work well if you know exactly what you want and expect your employees to hit the ground running. This approach may lead to more stability over time. But, some employers find a more stable workforce can lead to fewer new ideas.

The main point is that there’s not a right or wrong way in general. There’s the right way for you. The key is knowing your budget and your needs. 

Focus on Value

As you find and grow your team, it’s easy to get focused on bottom-line costs, driving you to make pay decisions that you subsequently regret. Rather than focusing on the cost of an employee,  focus on the value the employee brings to your business. The right employee or team can change your revenue significantly. Focusing on the growing revenue vs. the cost of the team will help you keep the big picture in mind.

Keep Your Eye on the Long Run

The adage “you get what you pay for” certainly applies to employee compensation. When thinking about your pay strategy, don’t be tempted by the ultra-low rates you may see advertised by some services. 

Take the time to find the right person. You are looking for a partner to grow your business. Pay that partner for her expertise and keep an eye on the long run. Finding and keeping a dedicated master of her craft will save you time, money, and hassle. The wrong person or lots of employee turnover can lead to lost time, more expense, and headaches.

Compensation Ranges for Common Roles

Pay Changes Over Time

Once you have employees in place, set a regular schedule to reconsider compensation rates. Many employers have an annual pay cycle to consider each employee’s contribution and compare it to current market rates. This process helps you stay ahead of the pay curve and prevents you from suddenly finding that your pay practices are out of date.

Some employers increase pay based on tenure or cost of living changes. Generally, compensation professionals suggest sticking to contribution level and market trends rather than tenure when considering pay increases.

Questions?

At HireMyMom, we match employees and businesses every day, giving us a unique view of wage trends. If you have a question or need to fill a position, visit HireMyMom.com and consider using  HireMyMom’s Concierge service. Our HR Specialists can also tell you more about compensation trends and how you can craft an attractive pay package that makes sense based on your philosophy.

When you are ready to fill a position, our HR Specialists will do it all for you from start to finish and present you with the top candidate(s) sourced from a wide array of qualified applicants who will be dedicated to helping your business succeed and grow.