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How Companies Choose What Salary To Offer You

The feeling that our work is not paying well can be very unpleasant, but even more so if we learn that people with similar positions earn more than we do. This, unfortunately, is given more than it should.

But, how do companies mark how much someone should charge and how do they modify their salaries?

PayScale , a company that runs AI-powered payment software, surveyed 7,000 companies to ask them about this.

The market, the guide for the employee and for companies
According to the report, only 8 out of 100 companies do not compare their jobs with the market . Most are reviewing salary data from all sorts of sources to determine the salary ranges for their jobs.

Additionally, more than half of the organizations surveyed have conducted a market survey in the past year. For competitive or fast-moving positions in the market, they check the market data monthly, weekly, or daily.

Companies are willing to pay more than the average depending on the position
Not all jobs are valued the same. Overall, 51% of organizations pay the best for the most competitive jobs. Let’s break down what this means. In the case of “basic” jobs, for example low-level clerks, an organization may decide to target the 50th percentile of the market, or pay “at market price.” For jobs that are considered highly valuable and competitive (for example, software engineers), they may decide to target a higher percentile, such as the 90th percentile for the market.

More likely to give bonuses than to raise wages
The report also shows that organizations are increasingly turning to variable pay, which includes incentives, bonuses and commissions, to retain employees. 71% of the organizations surveyed use variable remuneration . By far the most typical form of variable remuneration is the objective bonus (67%), followed by the one-off bonuses (39%).

Merit-based compensation plans (already used by 59% of companies) and discretionary bonuses for all employees (34% of companies) are increasing in popularity as tools to retain employees.

How do you know if they are offering an adequate salary?
The same platform gives some tips to know if we are charging better or worse. Also studying salary reports from our sector, asking about possible bonuses, or agreeing to a salary review from time to time can be some of the mechanisms. If the company can’t pay you the base salary you want , it may be willing to sit down with you in three to six months to reconsider your salary based on your performance.

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