How much should you pay your new employee?

Attracting top quality staff is a challenge even for large organisations, so how can an SME compete? When taking on new staff -especially your first employee – the remuneration package plays an important part in employer and employee considerations, so you need to make sure you offer the right deal.

Going rate or performance based?

Most roles come with industry expectations regarding salary, and any position you offer will be expected to fall within these boundaries. A quick check of online jobs boards will help you identify the average wage for a specific role.

You could also choose to offer a basic salary that is below the average expected, and offer employees a performance related bonus scheme to boost their earnings. For extremely high performing employees, this could see them earning more than the average wage. It is important to remember that the administrative burden of managing a constantly fluctuating payroll increases the cost of such schemes to your business.

Non-financial employee incentives

Increasingly employees are less motivated by money, and are more interested in the other benefits your business offers. Younger employees (also known as ‘millennials’) are more likely to join businesses that offer flexible working provisions, such as Bring Your Own Device (BYOD), flexi-time and remote working.

This is great news for SMEs as implementing alternative working options are often inexpensive and may be enough of an incentive to allow them to hire a bright new employee at a pleasing price point.

Always remember that hiring a less-than-impressive candidate because they’re cheap is a false economy. Hiring the wrong employee comes with far more additional costs than simply paying a bit more for the right person.