Perfman HR: Crafting a Salary Offer - Welcome Aboard
Perfman HR: Crafting a Salary Offer - Welcome Aboard
You've narrowed down your candidatedatabase, created ashort-list, interviewedthe most promising prospects,invited them back for followupmeetings, discussed all thepossibilities with your team,decided on an employee, andchecked his or her references.
Now, it's time to make the offer and welcomeyour new team member. The conversations youhave during the hiring period and decisions yousubsequently make set in motion a cycle of goalsetting and performance management that willhelp keep your new employee motivated andgrowing and making positive contributions toyour business for years to come.
CRAFTING YOUR OFFER
Before you actually contact the candidate to make an official offer, you need to nail down theissues of salary, bonuses, benefits, and any otherperks you are considering.
Salary
The first decision you need to make is the salaryyou intend to offer. If you have access to informationon industry salary standards, you are ina good position to set a salary that is fair for theindividual's background, talent, experience, andsalary history. To research what other companiesare paying, survey classified ads or consultprofessional and trade associations, humanresources specialists, and recruiters in your field. Many companies set salary grades or rangesfor each type of position, expecting the hiringmanager to negotiate within that given range.
The grades may be narrow and specifi c (e.g., Rs. 50,000/- to Rs. 75,000/- per month for entry-level analysts), orfairly broad, based on an individual's knowledge,skills, and experience in comparison with othersin the same job. Not all salaries are straight salaries,however.
Some individuals, often those working in sales, are paid using a performance basedsystem that links compensation toaccomplishmentsfor example, an employeemaking 24 lakhs a year could potentiallyincrease his income to Rs. 45 lakhs by meetingdesignated goals, such as decreasingoutsourcing or raising productivity. The extraRs. 21 lakhs would be paid as a yearly bonus, andthe base salary would remain 24 lakhs for thenext year. If these objectives aren't reached, theemployee's pay rate does not rise above the basewage or salary. Performance-based pay systemshave been shown to make employees moreeffective and productive than straight salaries.A recent survey by World at Work, an associationfor human resources professionals, showed that79 percent of employers now use performance basedpay, up from 66 percent in 2001.
Some employers use a skill-based system, basingpay on the number of skills the employeepossesses. More than half of all Fortune 500companies reward at least some of their workerson this basis, usually those in the manufacturingsector. When employees acquire new skills, theirpay increases, and if each skill is assigned a priceaccording to its value to the business, employeesare motivated to acquire new skills. Someemployers also add the incentive of a variable payprogram and give bonuses for extraordinaryindividual or group performance in addition toskill-based pay.
Whatever your system is, it's important that you explain it to the prospective employee whenyou present your offer. Also tell your chosencandidate how his or her work will be evaluated,how superior performance will be rewarded, andwhat measures you use to determine incentivepayouts, if any.
ou've narrowed down your candidate database, created a short-list, interviewed the most promising prospects, invited them back for followup meetings, discussed all the possibilities with your team, decided on an employee, and checked his or her references.
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