Competitive Pay has become another buzzword that companies use to elevate themselves above other organizations making offers in the job market. They throw this phrase around like a magic word that will hypnotize you the applicant to choose them over other companies.
What Does Competitive Pay Mean?
Literally, Competitive pay means the average of the salaries offered for a job description in a region – where a competitive salary is above this average.
For example, if the average salary of an IT developer is 30k€ Gross per year and a company offers a remuneration of 35k€ we can say that it is competitive.
Simply put, Competitive Pay is wages that are above the average pay in a locality, region, or industry that you’re working in.
Competitive benefits are the totality of all the benefits you’ll get, working for your prospective employer. This includes lunch flexibility of working hours, sick days off, leave days, allowances, and health insurance in some regions.
Does Your Employer Really Offer Competitive Pay?
New Job? New Salary? How do you know if this salary matches market standards? 90% of the time these competitive offers mean complete hogwash. How do you find out if your employment contract is a fair contract? This depends on a series of factors: Your level of education and your years of relevant experience, the industry in which you will be working, the policy and the values of the organization you want to join, the number of applicants for the role. Remember to be well informed to get an informed idea of what is competitive in your industry.
Five Factors That Determine Competitiveness
- Job Title
The role itself will often have a baseline for market rates. Use reliable industry resources such as the Bureau of Labor Statistics (BLS) to assess compensation rates for your role. Once you have an idea of the average market rate, use this number as a guide to evaluating salary competitiveness.
- Experience Level
Whether the role is entry-level, mid-tier, or higher, often determines the experience level required and the associated salary range. For example, entry-level positions require zero to little experience and are generally compensated less than mid-tier positions that may require several years of experience.
Your desired industry has the power to affect the standard of competitive pay. Lucrative industries like tech and finance may have more competitive rates compared to other industries in order to secure top talent.
- Region or Locality
The location also affects the average market rates of a position. Places with a higher cost of living and higher minimum wage standards typically compensate more to account for these factors.
- Job Availability
When a job is in high demand but lacks supply, pay is likely to be more competitive. On the other hand, if a position is in low demand but there are plenty of qualified candidates, this will likely decrease the market rate of the position.
What Makes a Pay or Salary Competitive?
This is not determined alone by the take-home cheque or direct deposit at the end of the month, Other factors account for how competitive a pay is. They are:
- Paid Time Off
- Health Insurance
- Other benefits and bonuses like:
- Signing bonus
- Performance bonus
- Relocation bonus
- Stock options
- Profit-sharing plan
- Supplemental budget (e.g., for wellness or career development)
Negotiating a Pay Raise
If you’ve already started the job but now feel that you deserve to earn more, there are proven strategies to discuss a pay raise. In the next post, we discuss in detail, exactly how to negotiate a salary raise, but here are a few pointers.
- Properly articulate and talk about your value to your manager.
- Do a market research of current earnings in your industry
- Give your desired figure for the raise and avoid giving a range when asked.
- Negotiate with leverage. Use all your positive milestone to make your case.
- Properly time the conversation requesting for a raise, Don’t go in at a bad time.
- While negotiating your pay raise, be humble and polite, yet confident.
To conclude, keep in mind that competitiveness will vary based on the market rates and what you bring to the table, so adjust your salary expectations based on your research. A company’s pay may vary from market rates according to its philosophy. Do your research, gather all the information so as to manage your expectations appropriately.
Read More: Setting Financial Goals for 2022