Not Paying a Competitive Wage (Too High or Too Low)

It is tricky business to set a proper starting salary for a position.  Pay too much and you will hurt the company.  Pay too little and you risk losing key employees to better paying firms. When setting a wage, it is important to look at the following four factors:

1. Prevailing wages in your market: This is by far the most important criteria in setting a wage.  In 1970 an accounting clerk made around $6.00/hour.  In 1990 the same clerk probably made around $9.00/hour.  The 1990 clerk wasn’t necessarily 50% better, but inflation and economic conditions had caused the wage to be 50% higher.

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