How to determine Salaries

Small business owners find one of the hardest decisions to make is what to pay their people. Many struggle with the balance between paying a fair salary and what the business can afford.

To give you some guidance, keep the following in mind.

Market Position
You are have taken the time to determine where to position your company in the market – high end provider, unique proposition with average pricing, or the high volume/low cost provider. A well thought out strategy which is resonated in the marketing of the company.

Pros/Cons
When a market position is determined, it is done with an understanding of pros/cons of the position and the long-term possibilities. The same analysis needs to go into the decision on salaries.

Starting Point: Salary Position = Market Position
This is the place to start. Companies should match their salary position with market as the starting point. The numbers need to be run against revenues and other expenses. From there the owner needs to determine if the salary number needs to go up or down.

Research
There are many sourced on the web and industry specific organizations to assist a company in determining where to low, average and high salary points are.

Understand the Salary Position
An organization needs to realize, similar to the marketing position, the salary position will come with it’s own set of pros/cons. It’s fundamental for a company to understand the long term affects of their salary decision.

Know someone who needs assistance to determine their salary position. I would love to talk to them.