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How to define salary levels in your company

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Ted Blackwater |
Salary plan
Salary plan   You must find a way to reward some, and to inspire others to be rewarded

If you just started to hire employees or must devise a salary plan, that can turn to a nightmare. How to weight skills and knowledge to make everybody happy and your company competitive? The solution is simple.

There's no doubt, you can always take a look at the market and see salaries but the question is how to apply that to your company. You must find a way to reward some, and to inspire others to be rewarded.

The answer is to divide your people into three groups: A, B, and C.

The A group is always the smallest: Those are business stars, high-achievers, employees capable of doing what other can only dream about. No matter how hard you'd like your all people to be A, this is just not possible because different people have different capabilities.

A-employees are making autonomous decisions, come with their own ideas, improving business procedures and bring profit on their own with little to no guidance. The best way to reward them is a decent base salary plus generous bonus.

That may be stock options as it usually is, or hard cash, but tie their salaries to performance. Also, give them other benefits such as better healthcare plans or more free days because those people are hard to find and you should take care of them.

B-employees are highly-skilled employees but have less responsibilities than A stars. They are good workers, with well-defined duties, and they are the first support to the A-group. They require supervision because their mistake may be expensive although they are too good to make mistakes often.

You should reward B-employees with a salary that's competitive enough to prevent them find another company in your field. Their salary and rewards depend heavily on the industry and market conditions.

C-employees are the people every company needs and heavily relies upon, those are unnamed people that keep your company running from day to day.

However, they don't need such skills and knowledge as those in the A and B group, and they are easily replaceable. Think about stuff in a fast food restaurant and you'll get the picture.

They need supervision and their salary is closely tied to the market. Thus, they will have the lower salaries and be prepared to frequent changes at those positions.

Of course, the A, B, and C groups are just the starting point, there may be another groups among them, but this is a good point to start, especially if your company is young, and with time you will start to naturally recognize who belongs to which group.

All that said and done, don't make a mistake - don't think C-employees are here until they leave and that's it. Listen to them because they have the floor experience and their ideas may improve your business greatly.

It's not a rare that somebody started at the lowest level and came all the way up to the board. So, along with a salary, give them chance to step up and let your rewards be tied to stepping up the corporate ladder, until they are ready to enter the B or A group.


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