On the flip side, employers must navigate these negotiations with finesse, offering compensation that aligns with the candidate’s expectations and fits within the company’s fiscal boundaries.

Effective salary negotiation requires more than just understanding one’s worth; it involves strategic planning, robust research, and the eloquence of a diplomat. Here is a complete guide to effective salary negotiation that will benefit the employers and candidates equally:

Understanding the Salary Negotiation Landscape

The Candidate’s Perspective: Know Your Worth

For job seekers, understanding one’s professional value in the marketplace is the cornerstone of effective salary negotiation. This means recognizing the going rate for the job title and how one’s unique skills, experiences, and education can elevate that value.

Candidates should conduct a self-assessment that weighs their qualifications against the demands of their target role. This assessment includes tallying up hard skills—like certifications, degrees, and technical proficiencies—and soft skills, such as leadership qualities, communication skills, and problem-solving abilities.

Moreover, candidates must remain aware of economic factors that influence salary norms, including the cost of living in a specific region, the demand for certain skill sets, and the health of their industry. Websites offering salary comparisons can be helpful, but so can conversations with industry peers and mentors.

Networking events and informational interviews provide opportunities for gathering information and for candidates to start positioning themselves within their desired salary bracket.

Once candidates have a clear picture of their worth, they must then be able to communicate it effectively. This doesn’t mean simply stating a number during an interview. Instead, candidates should prepare to showcase their value through examples of past achievements and a well-articulated narrative of their career trajectory. They should be ready to explain how their unique blend of skills and experiences will benefit the potential employer, thus justifying their salary expectations.

This 360-degree understanding sets the foundation for confidently entering salary negotiations, equipped with the knowledge and communication tactics to secure a compensation package reflecting one’s true professional worth. Whether you are looking for software developer jobs or any other, these tips will help you!

The Employer’s Dilemma: Balancing Budget and Talent

Employers face a challenging balancing act when entering salary negotiations. They must secure top talent to drive the success of their organization while also adhering to budgetary constraints that ensure the company’s financial health. The key is to develop a comprehensive understanding of both the market conditions and the internal value of the role.

Before entering negotiations, employers should clearly understand the role’s importance within the company’s ecosystem. They must ask themselves how critical the position is for operations, the scarcity of the skill set in question, and the impact of the role on revenue generation or cost-saving initiatives.

Additionally, it is vital to understand the company’s position relative to its competitors in the industry. Are you a market leader able to command loyalty through brand reputation, or does your company need to offer more competitive salaries to attract the best?

Employers also need to stay informed about the current market rates for roles, which can fluctuate based on various factors, including geographic location, industry trends, and the economic climate.

Salary surveys, industry reports, and professional organizations can be valuable resources. Establishing a salary range rather than a fixed number can provide flexibility during negotiations, allowing employers to adjust offers based on a candidate’s experience and skill level without exceeding budget limits. Whether you are talking about management jobs or any other.

It’s also essential for employers to recognize the intangible benefits of investing in quality talent. While it’s important to avoid overstretching financially, underinvesting personnel can lead to higher turnover rates, increased hiring costs, and lost productivity. Offering a competitive salary can improve employee retention and engagement, which are critical for long-term success.

During negotiations, transparency is crucial. Employers should be open about the limitations and possibilities within the compensation package, including discussions around growth potential, performance incentives, and non-monetary benefits that could entice candidates.

Preparing for Salary Negotiation

Essential Research Every Candidate Should Conduct

To navigate salary negotiations effectively, candidates should arm themselves with detailed research. Here are essential steps for candidates to take when preparing:

Understand the Industry and the Company’s Financial Health:

• Analyze industry trends to gauge growth or downturns.
• Look into the company’s financial stability and compensation patterns.

Salary and Compensation Trends for the Role:

• Use salary data tools such as LinkedIn Salary Insights and Glassdoor.
• Conduct informational interviews with industry insiders.

Leverage Professional Networks:

• Engage with professional associations and attend industry events.
• Connect with peers and mentors on professional social platforms for insider insights.

Consider Geographic Impact:

• Research the cost of living for the job location using tools like Numbeo.
• Adjust salary expectations to reflect regional economic conditions.

Factor in Living Costs:

• Understand how location affects the value of the offered salary.
• Use location-specific indices to benchmark salary demands.

How Employers Can Establish Fair Compensation Ranges

When negotiating salaries, employers must meticulously establish fair compensation ranges. Here are the key steps to develop these ranges:

Assess the Role’s Value Within the Company:

• Evaluate the critical nature of the position.
• Determine the scarcity of the required skill set.
• Consider the role’s contribution to revenue or cost-saving.

Understand the Competitive Landscape:

• Analyze competitor compensation through industry reports.
• Utilize salary benchmarking tools to understand the market rate.
• Account for company-specific factors such as size and financial performance.

Establish a Salary Range:

• Set a minimum and maximum pay based on the role’s internal level and market rate.
• Allow for flexibility to adjust offers for candidates with varying experience levels.

Consider the Total Compensation Package:

• Factor in non-salary benefits like health insurance, retirement plans, and bonuses.
• Evaluate intangible factors such as company culture and career progression opportunities.

Keep an Eye on Budgetary Constraints:

• Align compensation ranges with the company’s salary structure and budget.
• Ensure the proposed range maintains fiscal responsibility.

Plan for Future Growth:

• Set expectations for salary increases and career advancement within the company.
• Incorporate performance incentives to align employee goals with company success.

Maintain Transparency:

• Be open about the rationale behind the offered salary range.
• Discuss the potential for negotiation within the established range.

Employers who take these steps can confidently enter salary negotiations, knowing they’re offering a fair and competitive rate while also upholding the financial integrity of their organization.

The Art of Conversation in Negotiation

Salary negotiation is as much about how you communicate as it is about the figures you present. Here are key conversational strategies for both employers and candidates:

Active Listening:

• Pay close attention to the other party’s words, tone, and body language.
• Acknowledge their points before presenting your counterarguments.

Clear and Concise Language:

• Avoid jargon or overly technical terms that might confuse the conversation.
• Be direct and to the point, ensuring your message is understood.

Balanced Assertiveness:

• Stand firm on your key requirements without being aggressive.
• Convey confidence in your value or offer without diminishing the other party.

Empathy and Understanding:

• Recognize the constraints and interests of the other party.
• Tailor your approach to acknowledge those factors, building rapport.

Questioning for Clarity:

• Ask open-ended questions to understand the other party’s needs and expectations.
• Use questioning to guide the conversation and uncover additional information.

Framing Your Perspective:

• Position your arguments in a way that relates to the interests of the employer or candidate.
• Frame your points to show mutual benefits and shared goals.

Flexibility in Approach:

• Be willing to adapt your communication style to the flow of the conversation.
• Consider different angles and be open to alternative solutions.

Navigating Deadlocks:

• Have strategies ready for when the negotiation reaches a stalemate.
• Suggest taking a break, reconvening later, or involving a mediator if necessary.

By mastering the art of conversation in negotiation, employers and candidates can work towards a successful and amicable agreement.

Negotiation Strategies for Candidates

Negotiation is a critical skill for job seekers, as it often determines not just their income but also their level of job satisfaction. Whether you are looking for retail jobs or any other. Here are some in-depth strategies for candidates to ensure they negotiate effectively.

Understand and Leverage Your Worth

Before entering any negotiation, candidates must understand their value in the job market. This involves researching industry standards, understanding the salary landscape for the role, and reflecting on one’s unique skills and experiences. Websites like Glassdoor, LinkedIn Salary, and PayScale can offer insights into what others in similar positions earn.

Once you have this information, you can establish a salary range that accurately reflects your worth. Starting with a range opens the door to discussion and shows that you are flexible and reasonable. Having a bottom line is also crucial – know the minimum offer you’re willing to accept and be prepared to walk away if the offer doesn’t meet your expectations.

Articulation of Skills and Experience

Your ability to communicate your value is as crucial as the value itself. Prepare concrete examples of your accomplishments that are relevant to the job at hand. Did you boost sales by 30% in your last role? Did you lead a team to complete a project two weeks early? These specifics will make a compelling case for why you deserve the salary you’re asking for.

Remember, the negotiation is not just about what you need but also about what you can offer. Make it clear that your experience and skills will benefit the company, potentially even saving or making them more money in the long run.

Active Listening

Negotiation is a two-way street; active listening can be your greatest asset. Pay attention to what the employer says, and read between the lines. Their priorities, constraints, and enthusiasm about your candidacy can guide your approach. For example, if an employer emphasizes budget restrictions, you might pivot the conversation towards non-monetary benefits.

Active listening also shows respect and builds rapport, setting a positive tone for the negotiation and your potential future with the company.

Handling Counteroffers with Poise

How you handle a counteroffer can significantly impact the negotiation’s outcome. Reacting impulsively or with visible frustration can damage your professional image and reduce your bargaining power. Instead, take the time to understand the offer. Ask questions if necessary, and if the offer is below your expectations, articulate why you believe it should be higher, referring back to your research and achievements.

Poise also involves patience; sometimes, the best move is to step back and ask for time to consider the offer. This gives you time to evaluate it and signals to the employer that you are in demand.

Practice Makes Perfect

Negotiations can be daunting, so practicing your approach is essential. Conduct mock negotiations with a mentor or career coach who can provide feedback. This rehearsal can help refine your delivery, anticipate questions, and develop responses. By the time you’re in the actual negotiation, you’ll feel more confident and prepared.

Employer Tactics for Successful Negotiation

Employers must also adopt specific strategies to ensure successful salary negotiations:

Setting Competitive Salary Ranges

Employers must balance market competitiveness with internal equity when determining salary ranges. This crucial step ensures that offers made to new hires are fair compared to existing employees and attractive relative to the market.

Gathering data from salary surveys and benchmarking against industry standards helps employers understand where they stand. Establishing a salary band for each position also aids in maintaining a structure that can be easily communicated and justified during negotiations.

Utilizing Non-Monetary Benefits as Negotiation Leverage

In today’s job market, non-monetary benefits can be as appealing as a high salary. Employers have the opportunity to get creative with their offers by including perks such as flexible work schedules, the option to work remotely, or extra vacation days.

These benefits can significantly enhance an employee’s work-life balance and tip the scales in favor of acceptance when an offer may fall short financially. Highlighting these perks can be especially effective in attracting candidates who value flexibility over a higher salary.

Adhering to Budget Constraints with Transparency

While crafting attractive offers, employers must adhere to their predetermined budget constraints. Openness about financial limits can prevent misunderstandings and establish trust.

Employers must communicate the rationale behind their offer, emphasizing that budgetary limitations do not undermine the candidate’s value. This honest approach lays the groundwork for a positive employer-candidate relationship and ensures that both parties clearly understand the offer’s financial aspects.

Common Salary Negotiation Pitfalls to Avoid

• Candidates should be wary of overreaching or coming to the negotiation table underprepared. Not having a clear understanding of their worth or the market can result in unrealistic salary demands or accepting an offer that undervalues their skills.
• For employers, offering a salary that’s too low can be counterproductive, as it may insult the candidate or lead to a quick turnover if the employee feels undervalued. Overpromising on career prospects or salary increments can also lead to future discontent if not fulfilled.

Closing the Deal: Finalizing the Salary Agreement

The final stages of negotiation should bring clarity and commitment from both parties:

• Ensuring the offer details are clear and in writing is crucial for candidates. This includes understanding the salary, benefits, and any conditions or contingencies associated with the offer.
• Employers should strive for transparency when finalizing the offer. This means providing a detailed offer letter covering all aspects of compensation, including any performance-related bonuses or raises discussed.
• Both parties should feel comfortable with the final agreement. It’s essential to end the negotiations positively, with a shared understanding and mutual respect, setting the foundation for a successful professional relationship.

FAQs:

How can I find out what salary range I should offer for a position?

Research the market rates for the position using salary comparison websites, consult industry reports, and analyze your internal salary data to ensure fairness and competitiveness.

Are non-monetary benefits as valuable as salary in a job offer?

Many candidates value flexibility, work-life balance, and benefits such as health insurance, retirement plans, and professional development opportunities as much as, if not more than, salary.

How should I handle a candidate’s salary negotiation if it’s above our budget?

To bridge the gap, be transparent about your budget constraints and offer alternative compensation, such as performance bonuses, benefits, or growth opportunities.

Can salary ranges discourage potential applicants?

If not positioned properly, yes. Ensure the range is competitive and explain how candidates can move up within that range based on performance and experience.

How often should we review our salary scales to remain competitive?

Review your salary scales at least annually, or more frequently, if there are significant market or industry changes to ensure ongoing competitiveness and internal equity.

Conclusion:

Successful salary negotiation requires a balanced approach from both employers and candidates. Employers should establish clear salary ranges based on market data and internal equity and consider the strategic use of non-monetary benefits.

Candidates need to research thoroughly, understand their value, and communicate effectively. Active listening and poise are essential for both parties. By entering negotiations informed and transparently, both employers and candidates can foster a relationship built on mutual respect and understanding, ultimately leading to an agreement that satisfies both parties and sets the foundation for a productive working relationship.

Before moving to negotiation, hunting for the perfect job is what you need the most. BCjobs can be your job-hunting partner!

The post The Go-To Guide for Salary Negotiation: Strategies for Employers and Candidates appeared first on BC Jobs Blog.

Legal Obligations
British Columbia has a law called The Employment Standards Act, basic requirements set out to ensure the rights of employees. The Employment Standards Act include minimum wages and terms of employment. Severance pay is mandatory under these acts. As stated in the Employment Standards Act, an employee is entitled to one week’s wages after three consecutive months of service with the company. For every year’s service, the employee is entitled to one week’s wages. For example, if an employee has been with the same company for four years, the company must pay the employee severance pay of four weeks’ wages. 8 weeks’ wages of severance pay is the maximum required by law. However, this could vary depending on the terms of the agreed upon contract.

What is a fair severance package?
A fair severance package is more than just a legal requirement, it demonstrates a level of care to the employees.   Providing a fair severance package to a laid off employee not only helps the laid off employee, it also reassures the remaining employees that the company has their best interest in mind. This sense of security in  employees is vital to the performance of an organization.

Keep these factors in mind when drafting a severance pay policy: The BC Employment Standards Act, the employee’s performance, employee’s behavior during his/her term with the company, etc.

Related to Severance Packages:

• Terms of employment | Giving notice to changes to employment terms
• Boosting Employee Morale

The post Severance packages: – What’’s Fair? appeared first on BC Jobs Blog.

Several factors are taken into consideration when designing salary structures. This includes job analysis, and salary surveys. One of the key factors when designing salary structures is the balance between internal and external pay equity. Internal pay equity refers to the employees’ pay compared with those in similar positions within an organization. External pay equity refers to employees’ pay compared with those with similar positions outside of the company. It is important for an organization to maintain a balance between internal and external pay equity. This will help keep employees motivated and promote harmony in the work environment.

Generally, companies employ two types of salary structures – Traditional and Broadband salary structures. Let’s look at each of these in detail.

Traditional Salary Structures

In a traditional salary structure there are many pay ranges depending on the nature of a position. The new employee generally starts at the bottom of a pay range. He/she will then move up the range over time based on his/her performance appraisal.

Companies using traditional salary structures have many pay ranges depending on the nature of each position. This salary structure provides a hierarchy system in the organization allowing employees to be promoted from one pay grade to another.

Broadband Salary Structures

Broadband salary structures are more flexible with fewer bands and wider salary ranges. Broadband salary structures are often used in flatter organizations with fewer levels or smaller companies.

In broadband salary structures, the emphasis tends to be placed on career development rather than job promotion.

Salary structures are a necessary part of effective management. They help make sure that the pay levels are externally competitive and internally fair. Salary structures also allow companies to reward performance and development while controlling cost. Well-designed salary structures will attract highly skilled people to your company and keep them motivated within the organization.

Articles Related to Fare Salary Structures:

• Compensation Surveys
• Pay Philosophies
• Retaining top employees by rewarding their achievements

The post Why Creating Fair Salary Structures is Important for Your Organization appeared first on BC Jobs Blog.

Types of bonus programs
There are usually two types of referral bonus programs, informal and formal, depending on the rewards and the process of the program.

• Informal Referral Programs- Employees work directly with the HR recruitment staff, providing them with referrals. Employees are also awarded directly by the HR management.
• Formal Referral Programs- The HR department organizes an event advertising the open positions. All departments of the company are involved. Every employee could refer candidates for any department. Awards are usually given out when all positions are filled.

How are employees awarded after a successful referral?
The reward varies from company to company depending on each organization’s needs and culture. Some companies offer cash, some gifts, some award both. Most companies give out the award after the referred candidate has worked for the company for a certain period of time. Some companies award after the candidate is hired, others may choose to award during the interviewing stage.

How to promote referral programs?
In order for the referral bonus program to work, companies must make sure employees know about it. Set up boards that advertise the program at the entrance and exit; email employees about the program; have meetings to let employees know about the referral bonus program. Most importantly, make sure the rewards are appealing to the employees.

Benefits of using different bonus models
Each bonus model offers its own benefits. An informal referral program is ideal in small organizations where there are limited resources for recruitment. It is also easier to track and monitor referred candidates in smaller companies. Formal referral bonus programs are suitable in larger organizations where the recruitment needs are higher and more resources are available for it.

Employee referral bonus programs are a great way for your company to recruit the most qualified candidates. Employees have a very good idea of the culture and nature of the company, and therefore, the referred candidates tend to work very well within the organization. There are many benefits that come with this program making it a very valuable management tool.

Related to Referral Bonus Programs:

• Recruitment Strategies
• Company culture as a recruiting technique
• Choosing Between Two Equally Qualified Candidates

The post Referral Bonus Programs appeared first on BC Jobs Blog.

EDITOR’S NOTE: Your readers can order free copies of the 2009 Salary Guides by visiting www.rhi.com/SalaryGuides or calling (800) 803-8367

TORONTO, Nov. 19 /CNW/ – Even in the current economy, certain skill sets remain difficult to find, according to the 2009 Salary Guides from Robert Half International. The recently released guides point to modest overall salary increases for accounting, information technology (IT) and administrative roles, but highlight specialized expertise that can enhance a professional’s marketability. This includes global experience for accounting professionals and web development skills for IT professionals.
Companies highly value employees who can identify cost efficiencies, develop long-range business strategies and maximize the use of technology,” said Max Messmer, chairman and CEO of Robert Half International. “Adding to the competition for those with specialized skills is a growing reluctance on the part of many professionals to leave secure employment situations in an unpredictable economy. This has made it a challenge for hiring managers to attract these workers”

2009 Hiring Outlook: Accounting and Finance

Overall, the 2009 research forecasts a salary increase of 2.8 per cent for finance and accounting staff. Companies are showing the most interest in professionals who can help their firms reduce inefficiencies and enhance profitability. Those who are familiar with International Financial Reporting Standards (IFRS) also are marketable.

Following are three in-demand finance and accounting positions:

–   Analysts – Companies are seeking analysts with experience in
financial analysis, data flow analysis and project management skills
who can bring strong leadership and analytical skills to the table.
Starting salaries for management-level analysts at small/midsize
companies (up to $250 million in sales) are projected to range from
$68,250 to $91,500.

–   Public accountants – Public accounting firms continue to look for
highly skilled professionals to help clients address fundamental
accounting, tax and audit issues. Firms seek experienced accountants
who can help offset an anticipated acceleration in baby boomer
retirements in coming years. Starting salaries for senior accountants
at large public accounting firms (more than $250 million in sales)
are forecast to range from $63,500 to $78,000.

–   Accounting clerks – Organizations are relying on individuals who can
help reduce inefficiencies and enhance profitability by promptly
handling purchase orders and assisting with accounts payables and
receivables. Accounting Clerks are expected to see starting salaries
of $31,000 to $40,750.

2009 Hiring Outlook: Information Technology

IT unemployment remains low relative to many other occupations, driven by
the increasing complexity and proliferation of new technology and the need for
professionals to support Web 2.0 initiatives to enhance creativity,
collaboration and functionality on the Web. Overall, IT salaries are expected
to increase by 4.3 per cent next year. A smaller pool of highly skilled
candidates for technology positions, coupled with fewer college graduates with
IT-related degrees, is making it difficult for employers to hire and retain
individuals within many specialties.

Following are three in-demand IT positions:

–   Application architect/developer – Companies will continue to invest
in a wide range of key applications that will provide them with a
competitive edge. Application architects can expect to see starting
salaries in the range of $83,250 to $107,750 in the coming year.

–   Database manager – Interoperable database systems form the backbone
of many businesses, placing a premium on IT professionals who can
keep manage systems with maximum efficiency. The salary range for a
database manager is expected to be $81,500 to $116,000.

–   Technical support – As companies implement a wider range of
technologies, the role of the technical support professional has
become more critical. Base compensation for Tier 2 help desk
professionals, for example, is projected to range from $41,250 to
$53,750.

2009 Hiring Outlook: Administrative and Office Support

Demand for highly skilled administrative professionals remains steady,
and starting salaries are expected to rise 3.2 per cent in 2009. As the role
of office support professionals continues to expand, businesses can be
expected to offer moderately higher compensation for the most skilled
individuals in certain positions. Applicants with industry experience,
technical aptitude, multilingual abilities and professional certifications are
highly sought.

Following are in-demand administrative positions:

–   Customer service representative – Businesses rely on these
professionals to maintain a high level of customer satisfaction and
loyalty, especially key in an uncertain economy. Senior customer
service/call centre representatives are expected to see starting
salaries ranging from $35,750 to $45,250 in the coming year.

–   Order entry specialist – In today’s economy, it’s imperative that
customer orders are processed quickly and accurately. Starting
salaries for senior order entry specialists are projected to range
from $31,750 to $40,000 in 2009.

–   Office manager – A well managed office is critical in the current
business environment. Individuals with proven communication skills
and purchasing and facilities management experience can expect
starting salaries to range from $40,750 to $53,000.

About the 2009 Salary Guides

The new salary guides include the 2009 Salary Guide from Robert Half International for accounting and finance positions, produced by Accountemps, Robert Half Finance & Accounting and Robert Half Management Resources; the
Robert Half Technology 2009 Salary Guide for technology professionals; and the
OfficeTeam 2009 Salary Guide for administrative positions.
Since 1950, Robert Half International has produced salary guides to offer
business owners and hiring managers information on prevailing salaries in
their geographic areas and insight into the latest employment trends.
Companies consult the annual guides to determine appropriate compensation for
all levels of accounting and finance, technology, and administrative
professionals.
Information in the guides is based on the thousands of job searches,
negotiations and placements managed each year by Robert Half’s staffing and
recruiting managers, along with the company’s ongoing surveys of chief
financial officers, chief information officers and other senior executives.
Continuing or ongoing salaries are not reported because many external factors
— such as seniority, work ethic, job performance and training — impact the
salaries of full-time professionals as work histories develop.
Robert Half International has more than 360 staffing locations worldwide
and offers online job search services on its divisional websites, all of which
can be accessed at www.rhi.com.

/For further information: Kristie Perrotte, (416) 350-2330,
kristie.perrotte@rhi.com/

Related to 2009 Robert Half Salary Guides identify job market bright spots

•   Salary negotiation tips – responding to salary surveys
•   Compensation Surveys
•   Responding to Online Data

The post 2009 Robert Half Salary Guides identify job market bright spots appeared first on BC Jobs Blog.

What should your letter include?

Job duties and responsibilities
Key responsibilities should be listed, along with a sentence indicating that “this list of duties is not exhaustive; other duties may be assigned as business needs arise.”

Compensation: Salary, bonus, commission structure, other
Be clear about salary: include details concerning car allowances, cell-phone allowances, expense accounts, parking and all non-salaried compensation.

Hours of work
Include your core hours of business and any expected overtime, business travel or weekend work. Outline fixed hours if these are applicable, noting that “these hours can be changed with two weeks’ notice”.

Vacation allotment
Identify how many weeks of vacation an employee is entitled to, plus any increase in vacation days after a given period. Note, too, if there is a waiting period before vacation privileges become effective.

Company expectations
Outline your organization’s dress and conduct codes, and the consequences contravening these expectations (if the position warrants).

Probation period
While the traditional probationary period is three (3) months (Employment Standards), some firms indicate six (6) months.

Health and safety responsibilities
You may wish to include the following sentence: “You have the responsibility to report unsafe working conditions; you have the right to work in a safe environment and receive training on any procedures with which you are unfamiliar.”

Reasons for termination with “cause”
Outline the reasons that would cause you to end the employment relationship. These may include: poor performance, negligence, dishonesty, or a breach of confidentiality that affects the organization adversely.

Statutory holiday entitlement
Clarify any days your organization considers to be statutory holidays beyond those indicated in Canada’s Employment Standards Acts.

Notice period
Outline the number of weeks of notice reasonably expected from an employee prior to holidays, leave or departure.

Making It Legal

• Do not contradict or “contract out of” the Employment Standards Act.
• Ensure that prospective employees have five to seven days to review the Offer (ample time to obtain legal advice, should a candidate choose to do so).
• Ensure that the Offer is signed prior to the first day of work.
• Ensure that the Offer is self-contained and does not refer to other employee handbooks or guidelines, as these may be amended from time to time.
• To limit the potential of one clause making the whole Offer invalid, consider adding:
  “If any provision of this Agreement is unenforceable, such unenforceability shall attach only to such provision and all other provisions shall continue in full force and effect.”

Recognized for its leadership and innovation in the staffing industry, altisHR brings out the best in people. Founded in 1989, the company provides temporary and permanent staffing services within Administrative Support, Finance, I.T. and Specialized Professional positions to Canada’s most prestigious firms.

Related to offering employment

• Writing Interview Invitations & Templates
• Auto Responders for Human Resources
• What to Include in a Letter of Offer

The post What you need to know about creating a letter of offer appeared first on BC Jobs Blog.

A pay philosophy is a company’s commitment to how it values employees. A consistent pay philosophy gives the company and the employee a frame of reference when discussing salary in a negotiation.

The goal of a pay philosophy is to attract, retain, and motivate employees. For companies in the private sector, this usually requires a competitive pay philosophy. For companies in the public sector, this means a well-rounded philosophy, with a focus on benefits and work life.

Companies attract, motivate, and retain through total compensation

The purpose of a good compensation philosophy is to attract, retain, and motivate good people. To accomplish these goals, companies use a mixture of the three main components of compensation: Base pay, also called salary; incentive pay, whether in the form of cash or non-cash award such as stock; and benefits, or non-financial rewards. A pay philosophy is a blend of all three, since the company must pay for whatever it delivers to employees.

For example, a company’s pay philosophy might be to offer salaries that are competitive in the market, or it might favor pay that is structured to attract employees rather than pay that helps to retain them. But few companies can afford to attract, motivate, and retain via generous compensation. The challenge is to create a pay program that acknowledges all three goals without exhausting resources.

As an example, suppose a small company with moderate cash resources is establishing a pay philosophy. The philosophy might look something like this:

• Pay a competitive base salary – not an aggressive one, but a salary comparable to what an employee could get somewhere else.
• Offer equity in the company to all employees, so that they can reap the rewards of the company.
• Be aggressive in total overall compensation through the use of the incentives. If, for example, an employee is below market by $20,000 in base pay, deliver market parity via a $5,000 signing bonus; a $5,000 retention bonus; and a $10,000 incentive. Incentive programs should be designed so that high-performance people get high compensation.

Lead-lag, lag-lead establishes timing of adjustments

Most companies review salaries once or twice a year, but the market moves continuously. Therefore, a company’s pay is likely to be at market value just once or twice a year, similar to the hands on a broken clock, which only tell the correct time twice a day.

As a consequence, companies must decide what time of year to offer raises, and whether to lead the market at the beginning of the year and lag behind at the end of the year; or to lag behind at the beginning of the year and lead at the end. These two approaches are called lead-lag and lag-lead.

Employee proficiency ties skills to market value

Some pay philosophies track the development of skills that lead to proficiency in a job. The more proficient an employee becomes, the closer to market value he or she gets. This is a way of paying according to a market based on the value of skills.

Paying for employee proficiency is in contrast to paying for longevity, which has fallen out of favor in many industries but prevails nevertheless. The formula for employee proficiency involves calculating a comparatio – the employee’s salary over market, defined as the median or some other control point. For example, if an employee earns $45,000 and the median for that job is $50,000, the employee has a comparatio of 90 percent.

An employee who has lingered at a comparatio of 90 percent is at risk of leaving the job. If the company is interested in retaining the employee, it won’t cost much to bring him or her up to market. If there is a reason the company doesn’t want to pay 100 percent of market for this job, for example if the employee is not yet fully proficient in the job, it might still make sense to pay the employee 98 percent of market. In the example above, the company would pay $4,000 more to their current employee, who might well merit the full $50,000 anyway, to insure against the cost of hiring a new employee.

There are several advantages of the pay-for-proficiency method. Because pay is tied to the market value of a job, employees don’t get stuck with merit increases of just a few percentage points a year. Because the market value of a job is tied to skills, the conversation about compensation can begin from a level playing field: An assessment of how the employee compares on each of a number of measures of proficiency and skill.

Proficiency is not the same thing as performance. Someone who is not yet proficient at a job may still be learning some of the basic skills, especially after a promotion. Yet the employee’s performance may exceed expectations. Poor performers do not deliver on the expectations of the job, and companies do not typically retain these employees for long.

As employees become proficient in their jobs, it is important to keep them moving to the next level. Otherwise their pay will stagnate and they may become unmotivated or look elsewhere for a new challenge.

Program should be carried out consistently

By law, pay practices must be consistent, must not discriminate, and must not be arbitrary. Yet a pay philosophy may include different approaches for different types of employees.

For example, a company might decide to pay a competitive rate for most jobs and an aggressive rate for jobs that are especially difficult to fill and important to the bottom line. Such a company might pay its executives and its sales personnel at the 75th percentile and the rest of its employees at the 50th percentile.

A philosophy applied inconsistently can devalue employees and lead to trouble. For example, suppose a company established a flat rate of $9.90 per hour for nonexempt employees in a customer service role. The department had 200 percent turnover. Despite the published flat rate, some employees with college degrees successfully negotiated for $10 per hour or more, while employees with 20 years of experience faithfully assumed the flat rate was non-negotiable. Soon, three women over 40, a protected class under age discrimination laws, were earning less than three men who had just graduated from college. The manager’s defense when confronted with the disparity was that the women never asked for more.

Legal cases involving such discrepancies often center around the principle that it is more egregious to violate and be inconsistent with your own pay practice than it is to follow the law. In this example, correcting the discrepancy could cost the company tens of thousands of dollars. If the money isn’t in the budget, the department could be forced to lay people off or freeze salaries.

Communication is part of retention

Employers benefit from communicating their pay philosophies to employees, because a sound philosophy consistently applied creates a sense of fairness. Some companies advertise their pay structure as a recruitment and retention strategy. If a company publishes its pay philosophy anywhere, it should also tell any employee who asks.

Job candidates should also be aware of a company’s pay philosophy. If a company doesn’t have a pay philosophy, it will be easy to tell during the salary negotiation. Some companies even publish the philosophy in an employee handbook, and show employees where they are in relation to market. It makes more sense, during a salary negotiation, for an employer to say, “My final offer is $67,000, which is 100 percent of market,” than it does to say, “My final offer is $67,000, and I can’t pay a cent more.” Can’t usually means won’t.

It can be to a company’s benefit even to communicate a two-pronged pay philosophy where some jobs are compensated at more than the market rate. For example, one company with high turnover in its customer service department, a department critical to the company’s success, decided to compensate customer service representatives above market. Customer service people got better work spaces, incentive plans, and higher-than-market base pay. In communicating this change in philosophy to all employees, the CEO spoke candidly about the business reasons for the philosophy and the value to the company. Some employees thought the change was unfair, and left the company. But others respected the CEO for his honesty and fairness, and stayed. It became easier to hire and keep personnel for customer service jobs, and the plan succeeded.

Start the dialog, involve senior management

If you have questions about the philosophy behind your compensation, ask your human resources department for a copy of the company’s pay philosophy. This should show you the link between your pay and the company’s overall compensation principles.

If your company does not yet have a pay philosophy, suggest that the human resources department establish one. Employees need to see the connection to understand their value. Pay philosophies are important for companies of all sizes and stages because without them entrepreneurs could end up underpaying or overpaying for employees. Both problems result in a cost for the company, either in turnover or high salaries. In most companies, a human resources person takes responsibility for compensation; in a small company, the CEO might become proficient in the principles of compensation.

When a new company is establishing a pay philosophy, senior management must be involved, and the philosophy must be strongly aligned with company objectives. The CEO and other senior management must understand the program, agree to it, and support it consistently in order for the effort to be successful and worthwhile.

– Erisa Ojimba, Certified Compensation Professional

Related ro Pay Philosophies:

• Employee Retention Programs
• Employee benefit plans that small firms can afford
• Compensation Surveys

The post Pay Philosophies appeared first on BC Jobs Blog.

Direct
•    Wages and salaries
•    Incentives
•    Bonuses and commissions
•    Stock options

Indirect
•    Benefits
•    Income protection programs such as Employment Insurance, Canadian Pension Plans and Workers Compensation.

Indirect benefits are costly to you and their value should be communicated and acknowledged when discussing the compensation you offer. When accompanying a base wage or salary with incentives, bonuses, and/or benefits, you in turn create a compensation program that should support the values and goals of your business.

When developing your business’s total compensation program it is important that you understand and incorporate what is important to your business and its objectives. Consider creating a combination or variety of elements to your compensation program in accordance to your employee demographic and budgetary constraints. Program design, guidelines and procedures should always be tailored to contribute to your business’s success within the context of its operating environment. Ensure to include the following:

•    The different elements that will comprise the total compensation your business offers to its employees
•    That it is comparable or competitive within the industry
•    That it is internally fair; meaning that there is a logical increase in pay dependent on things like length of service, job performed, or the skills or abilities required to successfully complete the job
•    That there are established criteria that result in pay increase
•    A means of measuring and controlling your payroll costs
•    A means of measuring the success of your compensation program. For example being able to determine how competitive your compensation is in relation to similar businesses, and whether it accomplishes targeted outcomes of retention, performance and motivation.

The objective of compensation is to do the following:
•    Attract employees
•    Meet legal requirements
•    Retain valued employees
•    Motivate performance
•    Motivate personal growth
•    Sustain high morale

Some current trends in compensation are linking pay to performance objectives, competencies or skills required to perform the job, larger business strategies or goals, the position in relation to its importance of the business strategy and/or rewarding team accomplishments. It is essential that you realize the importance of compensation and the flexibility you and your business have in creating a more customized compensation package. This will in turn promote the attraction, retention and development of quality people.

Related to compensation
•    Recruitment and retention
•    Salary negotiation

The post Positive returns on providing well planned compensation appeared first on BC Jobs Blog.

To determine the prevailing rate for a job, companies can “benchmark” jobs against compensation surveys that are detailed and specific to the companies’ industries and regions. A good compensation survey uses standard, proven methods of data gathering and statistical analysis to determine how much companies pay for a specific job in a specific industry. A number of types of organizations conduct salary surveys, including compensation information businesses, compensation consulting firms, industry associations, educational institutions, and state and federal governments.

More than 80 percent of business managers and HR professionals said their companies either participate in or purchase at least one salary survey each year, according to a Salary.com poll. Companies with fewer than 500 employees spend an average of $2,000 annually on salary surveys, and companies with more than 5,000 employees spend up to $15,000 or more each year on these important data sources.

Companies pay for compensation data because the benefits exceed the costs. The amount companies spend on surveys is just a fraction of a percent of their total payroll costs. For example, although a company with 5,000 employees may spend $12,000 on compensation surveys, its total payroll is probably at least $15 million – in which case, their survey cost would be just eight one-hundredths of one percent of payroll.

Companies that participate in surveys (i.e., provide their own compensation data) customarily receive a discount on the final report. Fees for compensation surveys range considerably depending on the scope of the survey (regional vs. national, number of jobs surveyed, etc.). Participants could pay as little as a few hundred dollars for a small regional survey, or a few thousand dollars for a comprehensive, national survey. Perhaps the most expensive surveys are very specific regional surveys – those that pinpoint a very particular segment of the recruiting marketplace. Regardless of the survey, non-participants typically pay more than participants.

How do researchers conduct compensation surveys?
Surveys are conducted on a semiannual, annual, or biennial basis. Surveys normally fall into one of two categories: Custom and standard. Custom surveys are ones that attempt to answer very specific questions from a narrow selection of peer companies (e.g., What is the prevailing pay rate for sales people in the pharmaceuticals business in the Northwest?). These custom surveys tend to be available to, and used by, the participants only. Standard surveys, on the other hand, are often published each year and attempt to cover the same range of companies and jobs. These broad surveys are sometimes sold to non-participants and made available to members or customers of the survey sponsor/vendor. This focus of this article is primarily on standard compensation surveys.

The process of collecting data and producing a salary survey takes careful planning and execution that requires economic investment, people resources, and time. Some companies conduct surveys in-house using their own staff and compensation experts. However, most companies contract a third party to collect the data and do the number- crunching. The third-party approach provides a level of independence that most participants want. Some salary surveys are co-sponsored to attract more participants and to add credibility to the numbers. An experienced data provider in survey methods and statistical analysis is expected to put out high-quality, reliable, accurate data.

Conducting a salary survey is a time-consuming task. A traditional survey of 15 companies encompassing 20 positions can take between 6 and 12 weeks from the initial planning to the time the survey is distributed to participants. For a survey that includes more participants and more positions, it could take as long as four to six months. Survey respondents then have two to six weeks to complete the questionnaire. The length of time depends on the number of positions surveyed and the amount of information requested for each incumbent (person in a given job). After the data has been collected, it can take two to three months to analyze the data and make the findings available to the survey participants and others. Therefore the time from initiating a survey and providing results can be up to 7 months or more.

Traditionally, survey questionnaires are mailed out in paper form or on a diskette to participants, namely company managers or executives and human resources professionals, who will then complete and return the survey before a predetermined closing date. When assessing the methodology of a survey, it is important to look for the number of surveys mailed out, the number of participants, and the number of employees in the report summary. These numbers determine whether the survey is representative of the jobs and the industry. Also, there are several ways to collect and summarize data and it is critical that the user understand the underlying assumptions of a particular survey to assure its data is being used properly. It is even more critical when using multiple surveys to be sure that comparisons or compilations are done appropriately – on an “apples-to-apples” basis.

Compensation survey checklist
Here are some considerations to weigh for a company who is deciding whether to purchase a compensation survey.

• The background of the survey research firm and cosponsors, if any. Look for reputable firms that follow proven methods to gather and analyze compensation data.
• The scope of the survey. Look for studies that cover industries, jobs, and regions that are most applicable to your purposes; and that provide data on enough jobs to be cost-effective.
• The survey methodology. Review the summary of the methodology to make sure it’s consistent with standards set forth by reputable industry associations such as WorldatWork. Be especially sure the research organization is surveying human resource professionals or other people knowledgeable about compensation information within a company, rather than individuals.
• The number of participants in the survey. A good survey should cover a representative number of companies for its target population. A survey doesn’t have to cover the entire industry or region to be robust; even a few dozen responding employers in some industries can provide enough data for a valid survey.
• The names of participants. Look for your competitors and peers. For many jobs, you may be competing for candidates with companies in different industries but the same geographic area.
• The number of incumbents covered by the survey; and the sample size for each salary. A sample size of 30 or more is more statistically significant than a sample size of 10, provided the sample is representative of the statistical population.
• The relevance of the job descriptions to the positions being benchmarked. Look for a good match between the survey and your company. Be sure to compare job descriptions, not just job titles.
• The effective date of the survey data. The date a survey is published is always later than the effective date of the data within the survey. If necessary, age the data from the effective date to the current month.

Multiple survey sources. As with any form of research, it is important to use multiple data sources to narrow in on the “true” answer. Relying on a single source can be misleading if that source doesn’t perfectly reflect the market in question. WorldatWork suggests that compensation analysts should use multiple data sources wherever possible; consulting firms and academics agree. The exceptions come when there is only one data source, or when there is a spot-on data source, such as a custom survey, that truly describes a precise market.

Number of participants. Make sure the participants are a good sample of the recruiting market. Generally, eight to ten participating companies is a good sample for positions below the management level. The sample size should increase the more senior the positions being surveyed, both to get a good representation and to allow for more job matches, since each company is organized differently. There could be limited pay data in some industries, or the available data might not be representative of the industry because of a low participation rate in the survey.

Some firms reveal a list of participants, or at least those well known within the industry. The surveying company may disclose big-name participants to draw more interest from smaller companies. A list of major employers can also add credibility to the survey.

An important exception to note is that if a compensation analyst or compensation consulting firm is using multiple surveys to produce their own derivative market numbers, they will aggregate the data by combining the surveys, placing differing weight on different sources and sometimes even making a qualitative adjustment. When the data has been aggregated in this manner, it is not customary to report numbers or names of participants.

Participant profiles. The usefulness and relevance of a salary survey depends largely on the survey participants. For a small company, a salary survey of large corporations in the United States will be less helpful in determining what to pay employees than a survey of smaller organizations. Of course, a small company in a “company town” may find itself in a position to have to pay the same wages as the predominant employer in that town.

Survey participants can be quite different, depending on the goal of the survey. If the survey covers pay in large companies in different geographical locations, the surveying company has to make sure that companies participating in the survey are of similar size but from different locations.

To participate or not to participate
Here are some considerations for a company to weigh when deciding whether to participate in a compensation survey

• The prisoner’s dilemma. Every participant improves the quality and the validity of the results. Your company’s participation can stimulate others to participate. In other words, if nobody puts data in, nobody gets data out.
• Granularity. If your chief competitors are participating, it may make sense for you to participate as well so that an industry cut includes more statistically significant numbers.
• Validity. If your company is one of a few players in a region or an industry, your participation could make a significant difference in the validity of the data.
• Cost. Participants usually receive a significant discount on the price of the survey.
• Ease of use. Some surveys are easier and less time-consuming to fill out than others.
• Security. Gauge your comfort level with the means of collecting the data. For instance, electronic mail is less secure than some forms of Web-based transmission; paper and pencil is less efficient but more comfortable to some respondents.
• Added value. If you have participated in similar surveys over the same period, or have purchased similar surveys, make sure the survey in which you are considering participating adds value, such as some key jobs that are difficult to benchmark.

Job descriptions. Just as it is important to find surveys that compare companies of a similar stature, it’s also important that the jobs being surveyed are comparable to the job being benchmarked. When consulting a compensation survey, match the job descriptions rather than the job titles, even if the survey uses generic or widely used job titles. For example, an associate could be an entry-level position at one consulting firm, or it could be the title for someone with an MBA at another. Companies are structured differently, and different companies use different names for the same jobs, so job descriptions are the best way to match positions. Beware of surveys that use only job titles, as it is unlikely the data will be a reasonable representation of the jobs you’re interested in.

A survey job description should list the primary job function in one or two sentences, followed by key responsibilities. While the descriptions should be generic and not specific to any one company, they should contain enough information for participants to match appropriately to ensure the data is accurate. It is also important to match the organizational level of the positions be surveyed. A position that is at the group level at one company may be at the subgroup or the sector level at another.

Job titles are broken down differently in different surveys. Some surveys break them down by levels within the organizations, i.e., senior management, middle management, and entry level. Positions may also be broken down by job families or the types of responsibilities, i.e., business development, marketing, product management, and sales.

Compensation data. There are many things to consider when analyzing the compensation components of a salary survey. Because companies have different pay structures, compensation data is collected in ranges as well as actual pay. Salary surveys can provide employers more information on the marketplace and how to set competitive pay without overpaying or underpaying employees. Surveys should ask for the minimum, midpoint, and maximum for the surveyed positions, in addition to the actual base salary paid.

Usually, the prevailing practice for any one job is to pay a range of incomes. As a result, although the median pay for a job is likely to be a definable number, the range is just as important. Companies pay employees differently for various reasons. It could be the company’s pay philosophy; or it could be the geographic location or the industry practice; or it could be the incumbent’s length of service or proficiency in the job. Whatever the reason, it is unlikely that two companies will pay an employee doing the same job exactly the same amount.

When reading the base pay figures, it’s important to check how the numbers are calculated. The surveying parties can dictate to the participants how the numbers should be reported. Salaries can be on an annual, monthly, or hourly basis. For example, if the incumbent is a contract employee, hourly salaries are more relevant than an annual figure. The survey may request pay data for individual incumbents or averages for all incumbents matching a specific job description, depending on the types of surveys and their objectives.

Incentives/bonuses. Look at both the actual annualized payments and the target level expressed as a percentage of base pay when evaluating incentives or bonuses. This allows for adjustments for atypical incentives and bonuses. Be sure to understand what is included in this figure and how it’s collected. Although there is not a right or wrong definition of what is included in this category, it is important to understand how your numbers compare with those reported. In that sense, you need to know what it represents.

Other payments. As compensation changes, salary surveys are changing to include other forms of compensation such as profit sharing and stock grants. For more senior-level positions, long-term incentives are just as important as base salary. For example, an executive’s compensation package at a startup company can be made up of mostly stock options rather than cash compensation. For a survey to represent the total compensation, it needs to take into account the cash valuation of stock options.

It is important to spend a little time learning how these stock option numbers are reported. It is also important to note that with stock options, the value may be a number, such as grant value, that is presented as a dollar amount but is not a present value and therefore cannot be added to base pay and incentive pay to provide a total direct compensation number.

Effective date. For those surveys conducted on a regular basis, such as annual surveys, the effective date will be until the next survey is released in the following year. Otherwise, knowing the effective date of the survey can prevent companies from using outdated salary figures and causing error in pay budget forecasts.

If the survey is not current, the person using it should age the salaries to the current date. If a survey was conducted in September, the salaries are likely to be as of September or even August. If you are using the survey in December to benchmark for a new position in the company, you will have to age the number. A simple way to do this is to take the annual rate at which salaries are moving for this job and prorate it, salary increases overall this year are around 3.5% but this may vary by job title.

A similar approach is used in setting pay levels across a company. Sometimes these figures are set at the beginning, middle, or end of the company’s payroll year by aging the appropriate compensation data to those dates.

What about nontraditional sources of data, such as individuals?
Traditionally, pay data is collected by sending forms to human resources professionals and sometimes business managers, those most knowledgeable and authoritative when it comes to pay within their companies. Data provided by corporate representatives is more accurate than data reported by individual employees because employers have a strong business incentive to report data accurately and consistently for a wide range of jobs. They also have experience and understanding of the process so that the data they provide tends to be relatively “clean.”

The growth of Web-based data collection methods has made it technologically feasible and cost-effective to gather compensation information from individuals. These new sources often report data that is valid and real. It is, of course, not the same as data collected and reported by trained compensation professionals; and like traditional sources, these alternative sources vary in depth, quality, relevance, and other measures of integrity.

Conventional wisdom has always dictated that compensation data from individuals and recruiters is unavoidably, perpetually biased. Yet this hypothesis has been difficult to test because the data has not been prevalent. Although some see an incentive to exaggerate one’s own salary or that of one’s most recently placed candidate, a significant misstatement could backfire. Further, by assuring confidentiality and providing additional information, individuals could be convinced to provide very accurate data. Data from alternative sources, such as recruiters or individuals, can be good or bad. When good, recruiter data can be used as an accurate indication of what new-hires are being paid, and individual data should approximate the general market. However, both forms of data are still clearly different from company reported information. Combining the different sets of numbers may be deceiving but comparing them side-by-side can be revealing.

Why pay for compensation data when it’s available for free on the Web?
Compensation information is becoming widely available on the Internet, either for free or for a fee most individuals can afford. Many of these sources provide accurate, timely information. Yet just as different types of financial services firms fill different consumer needs at different prices, not all data products are alike. A Web-based brokerage business might provide the tools and information a user needs to make investment decisions, but without the one-on-one, custom consulting to shape a personal investment strategy. While some investors are satisfied with data only, others are willing to pay for the added value these consulting services provide.

Similarly, companies are willing to pay more for compensation data that provides the granularity of detail they need or the information that’s hardest to find. They look for the name and reputation of the organization conducting the survey; the number of companies surveyed; the number of “incumbents,” or employees covered by the study; the names of the companies that participated in the survey; and other measures of data quality and relevance to their industry. A middle-market professional compensation data tool might offer market-pricing information on commonly priced jobs, providing aggregated information based on primary and secondary research and analysis.

The top-of-the-line product in the compensation data business is a custom study of what each individual job within a company should pay based on very specific, targeted market data. A large company could pay hundreds of thousands of dollars, or more, for this type of in-depth companywide analysis.

Click here for information on the Salary.com’s Enteprise products such as CompAnalyst and Survey Center.

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