When you are looking for work, the words “competitive salary” will probably be used. While they sound appealing to people seeking to increase their earnings, what these terms really mean is not always obvious.
We’ll explain what this means and how you can ask for it.
What does competitive pay mean?
The term “competitive compensation” is used to describe compensation that’s comparable or even better than market value for a particular position.
A competitive salary in the field of human resources is equal to the market average plus a certain percentage. The percentage can vary depending on the company’s philosophy of pay.
This also means the compensation offered is comparable to other employers in the same field and geographical area.
Five factors that influence competitive salaries
Market value can vary depending on factors such as location and industry. Therefore, it is important to remember that the pay will not always be the same.
The factors that affect the compensation are listed below.
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1. Title of the Job
If you are trying to establish a market rate for a role, it is likely that the job itself has a benchmark. Assess compensation rates by using reliable resources in your industry, such as Bureau of Labor Statistics.
Use the market average to determine if your salary is competitive. When researching, keep in mind that salaries can vary depending on the job.
2. Experience level
The pay for most positions is based on your level of experience or experience required to do the job. The experience required for a role will depend on whether it is an entry-level position, a mid-tier one or if the job requires more seniority.
Entry-level jobs, for example, usually have little or no experience required and pay lower than positions at the mid-level that require several years’ experience.
When determining your salary, you should consider your education level and your practical skills.
3. Industry
Pay rates can be affected by the industry in which you want to work. In order to attract top talent, industries with high pay rates like finance and tech may offer more competitive salaries than other sectors.
Try applying for the same job in different industries to compare compensation packages. If you are looking for a higher salary, do some research on earnings and then apply to different companies.
4. Geographic
The location also influences the market rate of an individual position. Locations that have a high cost of living or higher minimum wage may be compensated more for these factors.
Try to tailor your search for the best salary and wage data by focusing on a particular geographic region. BLS provides data on salaries based on regions, states and metropolitan areas.
5. Jobs Available
Salary also varies based on demand and supply, just like the market price. Pay is more likely to be competitive when a position is highly demanded but there is a shortage of supply.
If a job is not in high demand but has many qualified applicants, the market price of that position will be lower.
Check out the list below of the U.S. jobs that are growing the most.
How can you create a compensation package that is competitive?
The entire package of compensation is considered when determining if a salary is competitive. Find out about additional benefits, such as insurance, paid leave, and retirement options.
Paid Time Off
A job’s paid leave policy is a key component of their compensation. It’s important to take time off work for health reasons. You may also need it if your life changes or you become sick.
A vacation can be an effective way to establish boundaries in the workplace to avoid burnout. You can maintain your performance more easily and achieve your professional and personal goals when you are able to balance work and life.
Health Insurance
Another important component of compensation is health insurance. According to Robert Half’s annual salary guide for employees, health insurance is one of their most desired employee benefits. It’s therefore no surprise it makes up a large part of a competitive compensation package.
Retirement Options
Retirement plans can be included in a company’s compensation package. You may be eligible to save for your retirement by contributing a portion of your pay to 401(k), Thrift Savings Plan, or 403(b).
You may be able to get a percentage match from your employer. Consider taking full advantage by contributing as much money each year that you can.
Additional Benefits
Ask about any other benefits that may be offered, such as stock options, bonuses and profit sharing, when you are evaluating an offer. These are some examples.
- Signing Bonus
- Performance Bonus
- Bonus for Relocation
- Stock Options
- Profit sharing plan
- Budget supplementary (e.g. for career or wellness development).
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Asking for a more competitive salary
The majority of hiring managers are expecting to negotiate the compensation. You should remember that compensation for a job is determined in part by factors that you, as an employee, can influence. Use this information to negotiate for the salary you desire.
1. Prioritise your goals
Know your compensation priorities before entering a negotiation. In many salary negotiations, a higher starting wage may be the main negotiation point. However, depending on company pay scales or budget restrictions, this may not be feasible.
Consider other compensation options. If you want a raise, it may be better to ask for an initial signing bonus. Or perhaps stock is more aligned with your goals.
2. Support your claim with proof
It may not suffice to ask for an increase in the starting salary, or improved benefits. You’ll need a compelling argument to successfully negotiate a higher salary. You can use the information you’ve gathered on the current market rate for the position and location of your choice, as well as the industry to support your negotiation.
Use this figure to help you decide what to ask for. Create an argument to show why you deserve a better salary and benefits. Highlight your skills, achievements or experiences that add value to the job.
3. Stand your ground politely
Even if there is some wiggle-room, HR pros may say that they expect to negotiate salary. They might also respond with the statement that the budget for the job includes the amount of the initial offer. It’s okay to push back politely and request that they explore your request.
You can try the following if you are not sure of how to respond in a professional manner:
The salary for the job is [insert the amount], however, based on my experience and skills I would like to discuss a raise to [insert the desired amount].
They may tell you that this is all they have to offer, or make a better offer.
What’s next?
It’s now time to create a plan for your finances. Consider investing in additional education and certifications to increase your salary.