How can we ensure fair salaries when growing?

As any company, especially a young one, grows it will have times when budgets are tight and times when they are not, people will likely be recruited in cycles and you will probably want to hire people from a great many different backgrounds. With that in mind how can you strive for fair salaries for everyone in the business?

This breaks down into a few different areas – I will try to cover:

  1. Paying everyone the best you can
  2. Don’t let the savvy negotiator get paid higher than anyone else
  3. Keep salaries fair over time

Paying the best you can

At the beginning you may not have much money and early staffing may be impossible at market rates. Or you may be in a situation where budgets are tight and it’s not possible to pay as well as you would like. Either way be open about it – discuss the reasons with your team and with recruits when explaining how you worked out the offer.

There has been criticism recently about offering non-cash benefits in lieu of salary – and maybe the point is valid. If you are clear about what you can, and can’t, pay and communicate it clearly I don’t see the problem. If you intend to up salaries say so and if you don’t then say that – it’s all part of recruiting staff that fit the culture you are creating.

Don’t flex your budget for good negotiators

Not everyone likes to negotiate on salary – some like to be valued rather than drive a deal. Others may just not be good at negotiating, and after all that’s not why you’re hiring them (maybe this would help with the gender pay gap?).

The underlying principle here is that everyone should be paid fairly – based on the value they bring to the company. To achieve this it’s important to use an interview to gauge the applicant’s relevant skills and experience to determine where in your pay scale they will fit. It may not always be possible to get this right but being able to explain your working will be valuable.

It’s common when explaining this method for an enquiring mind to comment: “Aha! But that means you should sometimes offer a salary above a candidate’s expectations!” That’s absolutely true. Sometimes an individual has undervalued themselves or perhaps they have only worked at companies that have lower salaries – whatever the reason it’s a pleasure to rectify 🙂

Review salaries regularly and fairly

Everyone knows that salaries need to be reviewed on a regular basis to reflect new skills, additional responsibilities, inflation and perhaps company success. However this is traditionally tied to annual reviews which pose the following challenges:

  • Staff may be less candid about negative comments if they think it could affect their remuneration.
  • Depending on the time of year or funding cycle some staff may get lucky where others could be reviewed at a less profitable time.

Therefore I prefer to review all salaries at the same time either annually or more often. By reviewing all salaries at once you are sure that the funding landscape affects everyone equally and no one is left behind. The flip side of disconnecting from the personal review process is that it may be harder to reflect individual progress but this can be avoided with ongoing objectives and learning which seems like a positive approach anyhow.

Always be fair

Hopefully these are some useful thoughts about keeping pay fair whilst not sinking the company. If you have any other thoughts on this please comment below.

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