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Are You Paying Your Staff The Right Salary?

Mention the dreaded subject of salaries and you risk opening a can of worms. Remuneration and bonuses are not simply the means of paying the mortgage and satisfying the Threshers and Majestic emporia each month but are also seen as measures of status and of confidence in the employee. Salaries are a highly sensitive issue and most commercial organisations rightly keep their staff salaries in commercial confidence and encourage their employees to do the same.

LinkedIn have created a "salary" page where people can search for their earning potential using their job title and location. This page appears to be based on user submissions so we can decide for ourselves whether people are more likely to under report or exaggerate their current earnings. However, whilst it's a useful tool, it does bring up an important point on setting salaries when recruiting new staff.

It may well be that the "going-rate" for a business development manager in Oxfordshire is £40,000 per annum. You may have found the ideal candidate for the role but she is pressing for £45,000 per annum. Do you refuse to offer the extra £5,000 because your other sales people are all on £40,000 and keep looking? Do you accept her because her CV and experience imply that she is highly likely to exceed her sales target? You probably will look to use the additional £5,000 as an incentive to be implemented after performance targets are met but how far will you push it if she will not compromise? Salary discussions are actually a good way for sales people to show off their negotiation skills so, if she is wise, she will come up with an attractive solution that helps you to feel happy about giving her what she wants - otherwise, perhaps she isn't that great a negotiator after all!

Forgetting the advantage of seeing her negotiation skills, what do you do when your ideal candidate wants £5,000 more than you were hoping to spend? Our advice is simple - what value are they going to contribute to the business over a twelve month period and can you assign a monetary amount to measure that value? So, if she's a sales person, it's easy. If she's carrying a million pound sales target and let's say that £200,000 of that sales target will be a clear net profit to the company then, surely, she's worth an extra £5,000?!

Similarly, if the candidate is an innovator, who comes up with a new product or revenue stream, it's obvious! If the candidate is likely to improve the efficiency of your organisation, then that extra £5,000 spread over 50 weeks is only £100 per week. So if she succeeds in saving one person two hours' work a week, then that £5,000 is paid for by the increased efficiency.

Additionally, work out the cost of recruiting the wrong person, firstly in purely recruitment fees, then the far higher cost of staff training, people time, loss of productivity, opportunity cost, client potential dissatisfaction or worse, and delay in moving the business forward etc.

So, as the old nautical saying goes, "don't spoil the ship for a ha'porth of tar"!

In other words, in our climate of high employment, when you have found the ideal candidate, make sure you find a way of closing the deal, via clever negotiation, but do bring your new investment on board.

Are YOU in a tricky negotiation with a potential new employee? Would you like some help?

Call us for a chat on 01793 762026 or email Jackie and her team at:


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