How do I decide how much to pay someone?

How do I decide how much to pay someone is a surprisingly common question. Although not everyone is motivated by money, we know that most people reading job adverts are looking at the salary So is it as simple as that, pay more than your competition?

How do I decide how much to pay someone

No. Although it’s useful to do a search on sites like Indeed or CV Library to see locally how many organisations are recruiting to the same job as you and what they’re paying.

We need to look at the factors within a job, and it’s comparison with other jobs in the organisation, to decide what is a fair rate of pay.

Factors to consider in determining pay

We are talking about jobs here, not people. Deciding what to pay people rather than what the job is worth is risky. It’s seemingly arbitrary decisions to pay different people different pay which leads to claims for equal pay or work of equal value.

There are 4 main factors within a job to consider in when answering the question “How do I decide how much to pay someone?”.

  • skill
  • responsibility
  • working conditions
  • effort

Skill

There are lots of different kinds of skills that a job can require. Some skills are more routine than others. For example, once an operative on a production line has learned to do a job, the skill that’s needed is probably routine/predictable. That’s a different skill level than a skill requiring judgement or creativity to solve problems.

Some of the kinds of skills that you may need to consider

  • mental skills
    • creativity
    • judgement
    • interpretation
    • evaluation
    • planning
    • ability to conceptualise
    • problem solving
  • interpersonal/communication skills
    • importance to the business of the relationships that the job holder must build and develop
    • sensitivity and complexity of the subject matter
    • nature/diversity of intended audience
    • negotiating
    • persuading
  • physical
    • demand
    • frequency
    • dexterity
    • how sustained is the physical effort over the shift

Responsibility

There are different kinds of responsibilities that may be included within a job, responsibility for

  • employees
    • supervision, coordination, management
    • work allocation, supervision and evaluation
    • guidance, training and development
  • services to others
    • quality and delivery of physical, mental, social etc services to clients, service users, public etc
  • financial resources
    • responsible for cash
    • contribution to budget
    • income generation
    • financial accuracy
    • the need for economy and efficiency
  • physical/information resources
    • tools
    • equipment
    • vehicles
    • buildings
    • records

Working Conditions

Exposure to disagreeable, unpleasant, uncomfortable or hazardous working conditions is usually reflected in the pay allocated to a job. Considering things such as

  • the frequency and duration of exposure
  • the effects of the variations or combinations of disagreeable conditions

Effort

These factors potentially vary widely in jobs and as such, you need to take care that you don’t subjectively value one type of effort more greatly than another.

  • physical demands and duration of physical effort
  • requirement for explosive physical effort and stamina
  • requirement for mental or sensory attention
  • maintaining concentration while shifting from one task to another

Is it all about pay?

In our experience, no it isn’t. But, it has to be said, that putting pay on a job advert will determine who applies for the job. When you’ve worked hard to set the pay for a job, the next thing to do is to protect your investment. Work hard to engage your new employee from day 1. There are some simple steps that you can take to improve employee engagement and essential health checks for your workplace culture that can do much to retain talent, once you’ve recruited it.

Are you still wondering “How do I decide how much to pay someone?”. Give us a call on 01706 565332 or email us and we’ll get right back to you.

Question to ask?

If you want to learn more about the content covered in this post, please get in touch.

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