Understanding what matters to potential employees and adapting your recruitment process to their requirements can help attract the most desirable applicants. Getting this stage of the recruitment process right involves considering what will attract the right candidate to apply for the job.
Salary is the number one motivator for potential candidates, with 40% of jobseekers ranking salary as the top factor*. Compensation is one of the most important part of the job description for jobseekers with the salary being the top factor looked for in job adverts.** Jobs that don’t display a salary or leave the salary as ‘negotiable’ on average receive fewer applications than those that do.
Getting the salary right should be a priority and the job advert is the first opportunity to display the salary. Getting this right can improve the quality of applications. Whether a job advert includes the specific salary, or simply the salary bracket, providing a level of pay transparency will help encourage more of the most relevant people to apply.
Knowing the expected salary helps both with a candidate understanding whether a job will be financially viable for them, and helps streamline conversations later in the hiring process.
The right salary
Due to fluctuations in the market, getting the salary right can be difficult. To help decide on the correct salary it is worth considering the four following factors:
Competition
An awareness of the standard rates for your area and sector will inform your decision on setting a salary. Run a search on similar positions in your industry and location and see what competitors are paying. It is possible that to attract a top candidate you may also need a margin for negotiation if they are seeking more than the advertised salary.Cost of living
In the event that you may have to look further afield for the right candidate, be mindful that a candidate might live and travel from outside the area. In such cases where the local catchment does not provide the required talent be prepared to negotiate a higher salary or offer benefits such as subsidised travel or hybrid working arrangements.
Benefits
If the salary on offer has stretched the permitted budget, consider other ways to attract the best candidates. An attractive benefits package can be just as incentivising to potential candidates. Examples may include a company car, bonus/on target earnings, travel subsidies, pension schemes, health insurance, extra holiday days, working from home allowances and gym membership.
Hidden costs
Whilst offering a competitive salary to attract top talent, it is just as important to not pay too much. When considering a salary, take in to account other expenses such as software licensing fees, a training budget, office space and equipment, utility bills and possible liability insurance.
Salary Benchmarking
Salary benchmarking is the process of collating external information on pay packages outside of your organisation. This process aids recruiters in better understanding the job market by tracking changing trends in salaries, benefits and compensation within industries. It can form an essential part of comparing the pay and benefits you offer to candidates against those offered by competitors. Up-to-date salary benchmarking reports can also help you stand out from the competition by being in a position to offer fair and competitive salaries to potential candidates.
The salary benchmarking process works by collating information on pay and benefits for various organisations. It then goes on to compare the pay package on offer against those offered for the same role by competitors. This data is used by recruiters to compare and understand the current job markets, and put in place competitive salaries for specific roles in their organisation.
Salary benchmarking can serve as a way to attract the best candidates for a role: by remaining ahead of current salary and benefits trends, businesses can ensure their compensation packages are in line or better than the industry standard, attracting the best talent and preventing them from joining competitors.
Benchmarking tools
Third-party tools and services are the most common way to benchmark salaries, saving a lot of time and effort, and being thoroughly reliable as they are an unbiased party. Salary benchmarking tools are available online and provide generic information on pay, according to location and industry. There are free salary benchmarking tools available as well as job sites to compare salaries with some offering in-depth analyses for a fee for the data. Sites such as Croner, Glassdoor, Indeed, Reed Hays, Hudson, and Total Jobs, People HR and Michael Page provide such tools.
The CIPD (the professional body for HR and people development) provides an in-depth guide to job evaluation and market pricing with many further sources of pay data, ways to interpret the data and methods to set fair and competitive pay.
Carrying out salary benchmarking
Carrying out an initial salary benchmarking exercise requires a thorough evaluation and building a compensation model. If you manage to get this right the first time, you will save time and only need to review it a few times a year. There are three steps required to carry out a benchmarking exercise:
Give all staff in your organisation a role and a level in order to compare them with parallels in the same industry;
Find salary benchmarks so you can compare your employees' salaries against the industry standard and keep your salaries competitive; and
Benchmark existing employees against others in your industry to see if you are offering competitive salaries or not.
Many HR professionals can experience some common challenges when carrying out a salary benchmarking exercise. To help avoid or minimise these, it is worth considering the following options:
When applying the filters, try applying a greater range of data which will show more results for you to compare against;
Using a ‘multiplier’ can help align any differences in salaries between different roles that you may wish to correct by suggesting how much more or less to pay employees.
Consider the average rates of pay according to the relevant city, region or country for your workforce. Depending on how you want to compete in the market, you can use the average rate go higher or lower.
Choosing the right benchmarking tool will allow you to access the information relevant to your needs. Some tools offer more in-depth local analysis whilst others only allow you to view by region.
When considering your analysis according to geography, the cost of living is worth considering as flexible and remote working increases.
Getting the salary right at the initial stages of recruitment and a continuous review of salaries within your organisation is an instrumental part of attracting and retaining a desirable workforce. Benchmarking can be a useful way to achieve the right salary brackets in your industry and geographical area and it is recommended to research different benchmarking tools to find the best fit and one that will aid your recruitment process. Once the right benchmarking tool is found and used correctly, it can be a cost saving and time efficient was of recruiting and retaining staff.
For further advice on getting recruitment right, or any other employment advice, please do not hesitate to contact the employment team at Laytons and we will be happy to help in all aspects of employment, immigration and pensions.
* Reed.co.uk https://www.reed.co.uk/recruiter-advice/how-to-attract-the-right-candidate-for-your-organisation
** BBC https://www.bbc.com/worklife/article/20210921-why-companies-dont-post-salaries-in-job-adverts
