When Should You Hire A Compensation Consultant For Your Business?
If you've been running your small business in the black for several years or more, you may be wondering about your next steps. For many businesses, a refusal to continue expanding your offerings or retail space can compromise your future profitability -- and key in the profits equation is the right high-level staff to take your business to the next level. How can you set your salaries to attract and retain top personnel? Read on to learn more about the factors you'll want to consider when setting compensation and benefits packages for your upper management members, as well as some situations in which hiring an outside consultant may be the best investment you can make in your business's future.
What factors should you consider when determining a fair salary and benefits package for your high-level employees?
Because of the strong social taboo against discussing compensation and benefits among friends and associates, as well as the reluctance for businesses to spill their secrets (including pay structures), it can often be difficult to get a good idea of what those in similar positions are paying their employees. In addition, a salary figure won't tell the full story -- many businesses may offer significantly subsidized health insurance, flexible hours, on-site daycare, or other benefits that can make a prospective employee's decision much easier. And with the U.S. economy continuing to improve, it can become more difficult for all but the most established small businesses to remain competitive.
As a result, determining fair market value for the slots you need to fill before you extend an offer of employment is crucial. Your first step may be to look at it from the employee's perspective, browsing transparency sites where other employees post salaries and benefits of popular local companies. These sites can give you an idea of what other area retailers and businesses are paying, even if this data is consumer-generated and its accuracy isn't strictly guaranteed. Even more importantly, this can show you what your prospective employees are seeing when they try to determine whether their own income and benefits are at, above, or below market rate. Being armed with this information can give you a good starting point when deciding what you can afford (and what you may need to throw into the mix if you're going to need to offer better benefits in exchange for a lower salary).
You may also want to contact a couple of headhunters in your area. Even if you decide not to utilize a headhunter's services to place your next few management employees, you'll be able to get an idea of the talent pool available and the approximate salaries and benefits they expect. For example, a headhunter can let you know whether the individuals seeking employment in your industry expect employer-provided health insurance as part of a benefits package or aren't willing to work 60 or more hours per week during the busy season without earning some additional vacation time in the interim.
When should you hire a compensation consultant to handle this process for you?
Although there are some steps you can take to research market salaries and benefits for those in your target employee pool on your own, in other cases, you may benefit from the services of a compensation consultant. As professionals whose sole tasks are to determine the skills and abilities your business needs (and how best to set salaries and benefits to acquire this talent), compensation consultants can take much of the emotion and potential bias out of the salary-setting process, ensuring you remain competitive without maintaining a distorted view of the working environment or pay rate you're really offering. Compensation consultants can also take quite a bit of work off your plate, allowing you to go about the day to day tasks of running your business without spending as much time on behind the scenes HR work.