Attracting the right person for the job is crucial for any business. For you to achieve this, you must create a compensation plan for your Las Vegas business. This compensation plan must reflect on how you value your employees by including the salary, bonuses, incentives, and commissions that employees can receive by working for you.
Here is a step-by-step guide to help you create the best compensation plan for your Las Vegas business
Determine the job positions you will need
When crafting your compensation plan, you must factor in all the employees that will make up your organization. For you to achieve this, you can do a job analysis to help you outline job duties, requirements, and qualifications for each position. List down all the job titles. Job titles can be a:
Description of responsibilities of the position (director, supervisor, manager)
Reflection of what the individual does (accountant, writer, web developer)
A combination of the duties and responsibilities and level of expertise (operations manager, lead accountant, marketing manager)
Tip: You may want to look at the particular industry that you want to attract so you can have a better understanding of the relative value of positions within your area of expertise.
Develop a pay philosophy
When you create a compensation plan, you must decide on what your pay philosophy is. Your pay philosophy will help you decide on what you want to provide your employees, so they will feel they are valued. You may include:
Company exclusive perks such as free lunch and gym memberships
$8.25 for employers not providing health insurance
Note that there is a recent proposal from the Nevada Minimum Wage Increase Initiative suggests to amend the statewide minimum wage to $9.25 per hour for all employees.
During the entire process of establishing your pay philosophy, you must not forget to test the plan against the interests of the company stakeholders:
Owners – will the pay philosophy give motivation for the owners to improve their work?
Employees – are they receiving fair compensation? Will it be enough to motivate them to work harder?
Clients – can the employees serve the interest of clients the best way possible?
Create job descriptions
While job descriptions are not a requirement for small businesses, it can help your company adhere to existing labor and employment laws. It can also help you establish guidelines when it is time to assess performance. Job descriptions will also help you compare with your competitors.
Set pay grades
You have to look back at your job analysis and job descriptions. Pay grades can be set using:
Benchmarking – you can use benchmarking to set your employees’ salaries. If a particular pay grade has three different positions, you can take the average of the salary and find the midpoint.
Existing salaries – Business owners can look at the organization chart and base salaries on what the current salaries of your employees. If you have different job roles with similar value, you can put them on the same hierarchy or one pay grade.
When setting pay ranges, it is best to know what your competitors are paying their employees. By understanding their compensation plan, you can devise a similar or better plan for your employees. Here is how you can do it:
Talk to the people within your industry and directly ask them how much they are paying. Make sure that you are talking on the same page by describing the roles and responsibilities of the position. You may also want to join a LinkedIn forum for this. You can see the base salary and total compensation depending on the years of expertise.
You can also ask Google. Search for salary surveys online. Just type, “Industry+Salary Survey.”
How would you like to pay your employees? Do you want to pay them hourly or per project? Keep in mind that while compensation makes an employee satisfied, it is not a performance motivator. When choosing a payment scheme, take into consideration the competition within your industry and city. However, a few exceptions apply when:
The role is too valuable for your business that requires above competition pay.
The role lacks value, and you believe you can pay less than the competition.
You have a significant performance bonus in place that will allow employees to enjoy higher compensation depending on their excellent performance.
It is also essential to consider how the compensation plan will be received internally (if you have existing employees already). Your payment schemes must not reflect any discriminatory practices (i.e., male supervisors receive higher salaries than the females)
Identify bonuses and incentives
Now that you have set the salaries and hourly wages, you now have to factor in benefits as part of the compensation. You may want to consider adding benefits such as:
Dental and vision insurance
You can also provide a 401(k) solution for your employees. It is a win-win situation for you and your employees. It allows eligible employees to save and invest a portion of their earnings for their retirement on a tax-deferred basis without costing your company too much.
The Bottom Line
Once you have created your compensation plan, rerun through it, and make sure that it is:
Easy for everyone to understand
Aligned with the company’s interests and goals
Fair for everyone in the company
Congruent with company budget and needs
In compliance with the state and federal labor laws