: How to Create a Compensation Package

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(543 Words)
Many compensation packages contain far more than the a single salary or per hour wage. They are often compromised of many different components, and this combination can help you attract the right employees for your business.
Start with the basic salary or wage
In most fields, someone begins with a salary or per hour wage. It is up to you to decide which one you want to offer. In some industries you tend to see one more than the other. For instance, in a lot of non-management retail and restaurant jobs that are not as high paying they often pay per hour. In more white collar jobs you are typically looking at a salary. If someone will be working an unsteady amount of hours, you may be more likely to pay them per hour, whereas if their general work week will be consistent such as the standard forty-hour week, then you might be more likely to give a salary.
So how do you decide how much to pay? Many start by getting an idea of what similar jobs pay. Of course you have to consider the area in which you live, since the cost of living is obviously higher in New York City than it is in Iowa. Of course you need to pay at least the minimum wage as governed by the laws in your area. Once you have an idea of the general range, then there are plusses and minuses to going above or below that. Obviously if you offer less you will save money in how much you pay out, however you may attract a lower class of employee who will not work as hard. Sometimes offering a little more can make your position much more competitive, and you might more than make up for it. Of course, consider the other forms of compensation you are going to offer because that may more than make up for the salary.
Consider performance-based compensation
In many fields, employees receive some (or occasionally all) of their compensation from performance-based statistics. If you are a salesperson such as a car dealer or real estate agent, then this often comprises a huge part of your pay. The benefits of this is that the person might be motivated to work harder since they get paid when they perform. Again, you can look at the standard payment amounts in your field.
Bonuses
In many fields, they give a bonus. It may occur once a year, often during the holiday season. Sometimes it is more often. This may be a function of how the company is doing as a whole. Consider what you can afford.
Consider benefits and other forms of compensation
Of course, many people depend on the benefits that their jobs provide. Many companies subsidize the cost of the benefits for the employees and/or their dependents such as health insurance premiums. They may offer life insurance, vision insurance, dental insurance, etc. Also, many offer profit sharing plans and retirement plans. Some offer miscellaneous benefits such as a gym membership or free child care.
There are many different forms of compensation and you need to think about what might be important to potential employees. You need to balance cost versus the level of employees you will attract.
Updated On: 09/19/2010 Published On: 09/19/2010 Article ViewerClose
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