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Business owners often think they are competing for talent from like-kind businesses. Yet, pay must be relatively competitive within the larger labor market to attract and retain employees. Here are three reasons your compensation plan is not competitive:
- Don’t know who are your talent competitors.
- Everyone gets the same merit raise without regard to value.
- Lack of proven upside compensation or advancement potential.
If successful in persuading a candidate to join your company for a lower base salary than their previous job, be very cautious. Your risk is reduced if you can paint a clear future for earning more than what they could have earned if they stayed in their current position. Yet, without a clear earnings future, candidates may not bring the level of commitment you desire.