Bath University Vice Chancellor’s pay is prompting protests over whether the university is ‘Paying Fair’, our local news outlets have reported widely in recent weeks about a row that has erupted in relation to the level of pay received by the Vice-chancellor of Bath University, prompting 4 local MPs to step down from roles within the University in protest.
Dame Glynis Breakwell is the highest paid Vice-chancellor in the country earning 3 times as much as the Prime Minister at over £450,000 per year and questions have been raised as to whether this represents true value for money and whether such a high level of remuneration is justified.

Many of us may never need to worry about our colleagues complaining about the unfairness of colleagues’ salaries at such levels or reaching the dizzying heights of £450k ourselves, however, how do we ensure that we pay ourselves and our staff fairly for what they do, and in comparison to their peers?

For many businesses, particularly in small business, where they often employ staff in low-skilled jobs or have limited financial resources so might plump for sticking with the minimum wage for many roles, but setting salaries for more skilled or senior positions can pose more of a challenge.

 

Setting Pay at the right level:

When you’re employing someone in such a role, possibly for the first time, you need to take consider a number of things:

  • What do others in your business doing a similar role or with similar responsibilities earn? Where will they sit within the team, who will manage them, you wouldn’t normally recruit someone to be managed by someone earning less than them.
  • What do the competition pay? You want to be paying a similar rate to your competitors- paying too much can quickly prevent you being able to flex on pricing when you need to, but paying too little will mean your trained staff can easily walk away with all that knowledge to earn more.
  • What are the market conditions? Are there lots of people wanted to do the job, or very few… this will impact what you need to pay. There will also be specific geographic and industry conditions that will have an impact.

The most important factor is often what the role is worth to you – any salary is a business expense, an investment upon which you are right to expect a return.  Clearly you need to pay enough to attract candidates with the right level of capability to do the job to the standard that you need, but you don’t want to overpay either.

In the case of sales and business development type roles, such people bring in revenue for you so you should consider the sales that you want them to make to cover any salary you pay them.  If you’re expecting a salesperson to generate sales of, for example, £30,000 you should probably be looking to pay at least half of that as a basic salary plus some commission to incentivise them.

But how do you set a salary for those people who don’t generate income but whom you couldn’t live without?  Their value often lies in what they save you so you need to consider what it would cost you to not having them around resulting in you having to get others to do the work or doing it yourself.

Fairness and equity is an important issue to consider when setting salaries, paying males and females differently for doing the same or similar work for example is an absolute no-no, and in all cases you should be able to justify any differences in rates if you are ever challenged by an employee about their pay compared to a colleague. There is increasing media coverage of large corporations ‘gender pay gap’ and whilst this doesn’t yet effect small businesses in terms of having to publish pay scales, there is still a need for transparency.

Benchmarking is usually a really good starting point to helping you understand what the going rate in your local area is.  If you’re not sure where to set the salary for a new role, or for a position that has recently become vacant and need some support, get in touch and we can help you to look at the options and attracting the right person for you!

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