What should you pay your employees?
Payment structures can be a hard task to figure out. It can be difficult to decide what to pay your employees. Often, your employees expect a certain kind of pay based on their titles, but sometimes employees are given titles that they feel earn them a much larger raise than what their job actually requires of them.
So, what do you do then?
Payment Structure and Tasks
Whether it’s the VP of Marketing or the Director of Sales, what is essential when building a payments structure is that you look at all the tasks and projects that are on that person’s list or scorecard. Once you have done that, you can apply a more suitable title based on that series of tasks and projects.
A lot of business leaders throw around titles to make their employees feel good, but when it comes to pay, that can inflate their ego and have them asking for compensation based on the title alone. C-Suite titles that deserve large pay should only be given when you know they have enough work on their roster to deserve both.
In short, titles should not be handed out easily. They should be earned if they want to be at the high end of your payment structure.
Steps to Building Your Payment Structure
When building a payment structure, it can be really helpful to follow these steps:
- Start by listing the person’s tasks/projects (like mentioned previously)
- Apply a proper title
- Research your industry to see what other companies are paying people in those roles
These simple steps will help you set up a proper payment structure for your business.
Roles in Your Payment Structure
It’s really useful to have three levels in place for every role in your payment structure.
Take your heads of sales for example:
You would have a director of sales, level one, two, and tree. Then, that would go into VP of sales, level one, two, and three. The level is dependent on their skills, experience, and workload and also for more frequent (but smaller) raises.
See how these levels make the ladder up longer and allow more room for growth as responsibilities increase and evolve. Doing this is a great way to establish your compensation and make sure that it’s tied to the projects, tasks, and workload instead of just their title.
Creating a proper payment structure takes time and consideration, especially when you want to create one that’s solid, doesn’t allow people to take advantage of you, and allows for lots of growth. Try following these guidelines for your payment structure and see what good it does for you!
What do you think is most important to consider when creating a payment structure? Let us know in the comments below.
If you have questions or would like more information, we’d be happy to help. Please send us an email, and someone from the team will get in touch with you!
Editor’s Note: This post was originally published in January 2018 and has been edited for accuracy and comprehensiveness.