Determine the Rate of Pay

Depending on what you are trying to achieve with your wage and salary scales, you can choose from a number of compensation strategies. These include:

  • Competitive compensation – people get paid the "going rate" or a rate that is similar to that paid to other workers that are doing a similar job in the industry or in the area.
  • Retention-based compensation – the longer the employee stays, the more they earn; this may include longevity bonuses at certain intervals in time; for example, 6 months, 1 year, 5 years, etc.
  • Performance based compensation – people get paid based on how well the individual or the team performs.*

You could choose one of those strategies or combine them to make your strategy more attractive to the applicants you are aiming to attract. For example, if you operate a hotel you would certainly need to pay your employees at least as much as other tourism establishments in the area. If there is a high demand for workers in the position you are trying to fill, or if you are losing workers to other businesses, you will probably need to pay those workers at the higher end of the scale in order to attract and keep them. If that is the case, you could also consider combining some performance based incentives to give your employees the opportunity to earn more money by improving your bottom line.

*Source: Finders & Keepers , p.35

Please click Next to find out more information on calculating employee pay levels.