One of the biggest determining factors for people to pursue new career opportunities is salary. However, it is important for job seekers to consider the total compensation package being offered by employers: salary, health benefits, perks, paid time off, etc. Figuring out this compensation package can be challenging to some employers, especially considering the competitive landscape that has become today’s job search.
According to the Bureau of Labor Statistics’ Employment Situation for April 2019, the unemployment rate has declined to 3.6 percent. This means that the competition for attracting top-tier candidates has become increasingly difficult. Job seekers can essentially pick and choose what opportunities to pursue and ultimately accept, so employers must create competitive compensation packages to attract candidates from competing opportunities.
The rule of thumb regarding a candidate’s experience level and background has been the more experience and education, the higher expected pay. If you’re an employer and looking to bring on a candidate with 5-7 years’ experience and a master’s degree, you should be prepared to offer a salary and compensation package commensurate with that experience level.
Depending on what industry you are in, titles can mean different things, including different wages. For example, an “account executive” in the advertising industry may earn more (or less) than an “account executive” selling season tickets for the local professional sports team. It is important to recognize this distinction as a job seeker, because in today’s society (and the popularity of updating your job on LinkedIn) a common selling point for a job is a fancy title.
So, why do different jobs in different industries have the same title but different salaries? According to Tarpey, “There are many reasons for this discrepancy – in some cases their job function may be critical to a particular industry, or it may simply be a matter of one industry being considerably larger than the others.”
Recently, there has been an influx of professionals moving away from some of the nation’s largest cities and to areas that most wouldn’t consider “hot spots” for certain industries. For example, many emerging technology companies are opting for Cleveland or other cities in the Midwest instead of San Francisco and Silicon Valley. One major reason for this? Cost of living.
According to BestPlaces, San Francisco is 295.2 percent more expensive than Cleveland. A salary of $50,000 in Cleveland should increase to $197,601 in San Francisco. The biggest factor in the cost of living difference is median home cost, which is 2520 percent more expensive in San Francisco compared to Cleveland. This is just one example of the vast differences in cost of living.
When comparing your position to a similar one in a larger urban area, it is important to remember this difference.
In-Demand Skill Sets
When looking for jobs, many job seekers fall victim to searching for certain titles. Instead, they should be looking for opportunities that align with their skill sets. Key skills are a more reliable metric to compare against than titles. As Tarpey mentions, “different companies may have very different definitions of the same job title.”
If job seekers focus on their skills instead of titles, they open up the potential of finding more opportunities. If a candidate has many skills, he or she can apply them to a wide variety of roles at an organization – something that an employer should consider when creating a compensation package.
Supply and Demand
This is another factor to consider that also can be applied to the job industry. Certain industries have more candidates than others. For example, the sports industry has a ton of people interested to work in some aspect, while there are only so many jobs available. As an employer, if your company is in an area where the candidate pool does not have the required skills, you might end up paying more to attract candidates that meet your requirements. That is important to keep in mind from a hiring perspective.
Compensation packages are a major determining factor for employees when considering whether or not to accept a job offer. As an employer, this can be a challenge due to the competitive landscape that the job search has become. Many factors play into what a company comes up with for compensation rates that are both fair and competitive. If you’re an employer trying to attract top talent, consider these five factors before creating your next compensation package.