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Paying “Market Average”? Time to Reevaluate your Compensation Strategy

Thursday, February 28, 2019
In his guest post, Dave Lehmkuhl, Regional Manager at Orion Talent, explores why companies should reevaluate paying “market average” salaries in order to recruit top talent.
 
Clients frequently tell me that they are paying “market average” for certain technical positions.  The unemployment rate is below 4%.  If you want to battle it out with every other company in your area for a candidate - note, not the BEST candidates, but ALL candidates that apply - then paying “market average” is okay.
 
But how do you know if the “market average” you are using is valid? I hear companies discussing an open Electrician position at $24/hr. That would be acceptable if this was 2014!  Technician salaries, especially Electrician positions, have skyrocketed in the past five years.  Electrician salaries are now at least $28/hr in most areas, and as high as $30/hr in tougher markets.
 
According to a recent article on Monster, "How to Determine a Job’s Market Value,” “Without a bona fide compensation expert in-house and lacking information on salary and benefits trends, ... [companies] sometimes resort to guessing games based on insufficient data of questionable quality. This is likely to put them at a disadvantage ...”
 
Here are my two recommendations for making sure your pay scale is valid and competitive:
 
1. Perform a market survey through a third party to establish the true market average for your critical roles. Monster concurs: “The most prudent approach is based on research involving, at a minimum, hundreds of employers or thousands of workers.”
 
2. Take that market average and add 10%!  If you are serious about recruiting the best, you have to be competitive.
 
If you accomplish these two steps - congrats, you can now compete for the top talent in the market! At Orion Talent, we believe in matching our client companies with the best talent the military has to offer. Part of this involves making available careers attractive to job seekers. With low unemployment, the salary status quo may no longer suffice.

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