When hiring employees, one of the first decisions you need to make is how much you will pay them. Here are a few considerations to make when settling on a wage.
Know the basic requirements
At the very least, every employer you hire needs to be paying the national minimum wage. This is different depending on the age of your employees. As of April, anyone aged over 25 must be paid at least £8.21 per hour. This minimum wage figure changes every April, so it’s important to keep aware of it.
Your employees may also be legally entitled to other benefits such as holiday pay, sick pay and maternity pay. It’s worth familiarising yourself with these so you know the minimum legal requirement.
Obviously these are just basic requirements and there’s nothing to stop you offering higher wages and other benefits. In fact, in many skilled jobs, you’d be expected to pay more than the minimum wage and minimum benefits.
Consider location, experience and qualifications
Location, experience and qualifications can all play an important role when deciding how much to pay your employees.
Location matters because living costs tend to vary across the country. In London for instance, you’d be expected to offer higher wages than somewhere in the north.
As for experience, this can also play a part, as it may mean that they are able to take on more responsibilities and may need less training. Certain skills are likely to make these employees more valuable – the higher their skills level, the higher the pay they’re likely to expect.
Qualifications are also an important factor to consider. Someone with a masters degree in engineering will expect more than someone with a regular degree. Such qualifications can serve as proof of skills and knowledge, even if these people aren’t experienced.
Research other companies
A good way to determine how much you should be paying employees is to look at what other companies are offering their staff. You may be able to do this by looking at job boards and seeing what other employers are offering in job ads.
If you can’t seem to find this information on job boards, you may be able to find stats online. You may even be able to hire someone to research into wages for you – this could be useful when taking on a potentially high earning employee.
Should you pay an hourly wage?
Whilst companies have traditionally paid by the hour, more companies are starting to bring in flexible hours, which allow employees to come and go as they please – so long as they’re getting the work done they can receive the same regular monthly or weekly wage.
This may only be suitable for certain types of work. The likes of retail and hospitality may require fixed hourly schedules so that people are physically in the workplace to serve customers.
Hourly wages can sometimes be harder to calculate in jobs where people may regularly work overtime. Time & attendance software may be able to keep track of these hours so it’s easier to pay employees the right amount. This form of digital tracking has replaced time cards, which used to be the way of recording hours.
Consider commission and bonuses
If your employees play a part in instigating sales, you may decide to pay employees commission. This involves paying out a percentage of the money earned from the sale to the employee that secured it. This can encourage employees to sell more in order to earn more.
Bonuses can be another incentive that encourage employees to work harder. This usually involves paying out a sum of money as a reward for meeting a target. These targets could be set to individuals or to the entire the team.
Consider other benefits
There are other financial perks that you can offer to employees.
An increasingly common perk is private health insurance for employees. This allows your staff to get free treatment at a private health clinic if they need it.
This could allow employees to book more flexible doctors’ appointments and skip NHS queues in order to get treatment faster – which could help you by reducing the time of which your employees spend sick.
It’s also possible to offer freebies and discounts to other local services. Paid gym memberships are a way of protecting employees’ health further. Meanwhile, restaurant vouchers and cinema discounts can allow employees to save money in their free time, improving their quality of life.
You may also want to pay for physical perks. This may include a work phone or a company car. It may be possible for your employees to also use these in their free time, again improving your employees quality of life beyond work.
Know your budget
When considering all of this, it’s also important to know your budget to avoid overspending on your employees. You and your business still need to be making a profit, so be realistic about how much you can spend.
Taking on employees may allow you to take on more business, in which case you may be able to up your revenue and therefore afford to give more away in wages. All in all, you may want to hire a financial advisor to go over the figures with you.