You might have come across the terms “competitive salary” on various job listings. But what is competitive salary? What are the factors influencing competitive salary? Find out all the answers about a competitive salary from this article.
What is Competitive Salary?
Competitive salary refers to an amount comparable to or greater than a job role’s market value. It is often an amount equal to the position’s average market rate and a particular percentage of that amount. The percentage will differ according to the payment philosophy of the organization. In a nutshell, a competitive salary is higher or at par with what other companies are offering for the same position in the same industry and geographic location.
What Are the 5 Key Factors That Determine Competitive Salary?
After knowing “what is competitive salary,” you need to know what factors influence it. The top five factors influencing competitive salary are as follows:
Remember that the competitive salary for a particular job role comes with a market rate baseline. You can rely on reputable industry resources to learn about the compensation rates of different roles. After figuring out the average market rate, you can use it as a base to figure out the salary competitiveness. Since salary can vary according to the role, you should refer to an accurate job title while making the comparison.
Level of Experience
Several jobs pay you according to your level of experience or the amount of experience to perform the job. The experience required and the salary range will depend on whether it is an entry-level, mid-level, or executive position. Entry-level positions come with lower salaries since little to no experience is necessary. Your level of experience will depend on your practical skills and theoretical knowledge. Therefore, the demand for your skill set will influence the competitiveness of your salary.
The standard of competitive salary will also depend on the industry you are choosing. Some industries, like finance and technology, might offer more competitive rates than other industries.
The geographical location largely influences the average market rate of a particular role. Usually, places with a high cost of living offer higher salaries to individuals. It’s necessary to check updated salary data according to region, state, and other geographical divisions to accurately figure out the competitive salary.
Availability of Career Opportunities
Salary in the professional world also varies according to supply and demand. The pay scale of a job will be higher when it is in high demand but has short supply. The market rate of a job will fall when it is in high demand and multiple qualified candidates are present to fill up the positions.
What is in a Competitive Compensation Package?
The different components of a competitive salary package are as follows:
The number of paid leaves given to employees is a significant part of the compensation e package. Time off from work is necessary for overall wellness. You might also need leaves for significant changes in your personal life or when you fall sick. Additionally, you need to go on vacations to prevent burnout at work. A competitive salary package comes with a sufficient number of leaves to help employees strike a balance between their personal and professional lives.
Health Care Coverage
Health insurance is another integral component of a competitive salary package. Employees are given different amounts of health care coverage according to whether they are employed on a full-time or part-time basis. A few highly desirable employee benefits include medical, vision, and dental insurance.
Several organizations include retirement options within their compensation packages. Depending on your employer and available options, you can save for your retirement by contributing a part of your paycheck to different schemes. Employers usually match a percentage of these contributions. Therefore, you should try to make maximum contributions annually as long as you can afford it.
A competitive salary package can also include several other benefits for employees. While negotiating your salary, you can also ask for different types of advantages from the employer. You can look for additional compensation benefits like stock options, bonuses, and profit sharing.
Tips for Negotiating a Competitive Salary
You might think that negotiating for a competitive salary is challenging. But some effective tips for negotiating a competitive payscale are as follows:
- Ask appropriate questions: You need to ask the right questions to employers to gather as many details as possible to become eligible for a higher salary. You can ask different questions to understand your chance of getting the compensation you want.
- Embrace positivity: A positive attitude is essential for the success of your salary negotiation talks. You need to show a willingness to compromise to reach an acceptable point in your agreement.
- Know your worth: While negotiating a competitive salary, you must be aware of your worth. You must be able to offer good skills to ensure that they give you what they want.
While negotiating a competitive salary, you need to remember that the employer might not be willing to offer you what you want. You must be prepared to reject an offer if it doesn’t serve your purpose instead of simply setting for less.