Until recently, I have considered that every professional, working in HR or other key business departments, understands the relevance of a market salary for a business. Sadly, this is not true, and with this article, I would like to increase awareness on this topic.
Let’s imagine the following situation: you want to hire a salesperson for your recently opened IT company, that will serve the financial sector. With the help of your job advertising, you now have 100 applicants to review. In the end, you select 5 candidates for the interview.
- The first candidate has 5 years’ experience in another IT company from the market and s/he is asking for a gross monthly salary of €2,000.
- The second candidate has 10 years’ experience in companies from different industries, including IT (for the last 2 years), and s/he is asking for a gross monthly salary of €2,500 plus sales bonuses.
- The third candidate has 8 years’ experience, mainly in services companies, and s/he is asking for a gross monthly salary of €2,500 plus sales bonuses
- The fourth candidate has 12 years’ experience in automotive companies, but also in one IT company, and s/he is asking for a gross monthly salary of €2,200 plus sales bonuses.
- The fifth candidate has 15 years’ experience in financial services companies, with demonstrated experience in IT, and s/he is asking for a gross monthly salary of €2,600 plus sales bonuses.
How will you decide? Can you compare their experiences? Can you decide who will help you to sell the products at the right price in the next 2 or 3 years when the expansion phase will be run?
Let’s complicate the situation a little. After you decide to hire one of the candidates, you find yourself at a business networking event, where one of the participants' shares that s/he recently hired a similar salesperson for €1,800 plus sales bonuses. During the conversation, you find out from the participant that they have offered this package because the market is usually paying this much. How come at your interviews, the candidates were asking for this kind of money, but this business owner hired his salesperson for a much lower salary?
On the market, there are thousands of sales professionals with different backgrounds and salaries. 50% of the sales professionals might be paid with a gross monthly salary of €1,800, but the other half could be also paid below this level.
And this is not all. Not all sales professionals are doing the same thing, or have the same experience, study level, or impact on the overall financial turnover. Also, not all the sales professionals are reflected in the salary surveys because mainly only the enterprise companies are participating in the annual salary surveys. And if you have a company in a small city, where the other companies are not participating in the salary surveys, how will you know the market level? You need to run a local market survey, but you will still not be sure if the other companies would be open to participate. The chances could increase if you contract an external consultant, to also ensure the comparability of the jobs.
The relevance of having real salary data is generated by the fact that you have the predictability of your pay cost and that you attract and retain the professionals that you need for your business.
The effort behind the salary survey management is huge. As you want to be paid for your performance, these services behind the numbers should also be paid. If you can get data without money, you will not get the right numbers. No one offers to invest in a project a huge amount of work time for free.
So, you should stop asking about payment levels in professional groups. Continue to be interested in calibration and start to ask for professional services. This is valid no matter if you just entered the market, or if you have several years’ experience in it. This makes the difference between professional and unprofessional salary data.
If you want to understand how to run the professional services, including training the management team, we can help you. Send us an e-mail at email@example.com.