Salary is a key motivator for most people, but the way employers come up with this vital number can often seem like a mystery. The more you understand how a salary is determined, the more influence you may have over the final figure. So, how are salaries calculated?
While individual experience and performance always plays an important role in salaries, the figure you are offered sits within a range that is based on a combination of four key factors - Industry benchmarking plays an important role in determining the size of your salary. “Good employers are constantly benchmarking their salaries within the industry and there are companies that assist them with this,” says Peter Noblet, Senior Regional Director of recruitment firm Hays. “Employers then make a decision about where they want to sit within this range. Some will want to be at the very top while others may sit in the middle or lower end of the scale and add other incentives, such as training and development or flexible working conditions in order to be attractive to candidates.”
You can also access industry benchmarking data from recruitment firms such as Hays, which publishes an annual salary guide across various industries and roles. SEEK also publishes quarterly salary trends based on average advertised salaries across industries. This information can give you more bargaining power.
What are the best ways to negotiate a salary level? Noblet says knowledge is key. “Understand what the current market rates are and make sure you can be clear about what you can bring to an organisation that might be different to other candidates. You can also try to negotiate a salary review within a certain timeframe if you don’t get the starting salary you want.”
Money may not be everything but it’s certainly important. If your job offer doesn’t come with the salary you expect, consider the other benefits a company may offer, such as work-life balance, career progression opportunities and training. If these benefits are attractive, they may form an overall package that’s right for you.