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Salary Calculation Steps

How do you calculate the salary of an employee? and how do you find out what a market-based reward is? with this step-by-step plan you determine a suitable salary in three simple steps.
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A suitable salary binds your staff to your company for a longer period of time. If the salary is too low, an employee will wonder over time whether the reward outweighs the required efforts. There is a good chance that this will lead to an undesirable course.

At the same time, you don't want to pay more than is usual for a similar position. To find out, you need knowledge about what an employee is 'worth' in the market. In three steps you arrive at a salary that's suitable for your employee and your company.

Calculate employee's salary

Step 1. What do other companies pay?

Salary surveys contain detailed information about wages that are common for similar positions. These examinations come in handy when calculating a suitable salary. This allows you to better substantiate your proposal during salary negotiations.

Keep in mind that not all salary surveys are equally representative. Some are based on the salary data of a small number of employees. So first check the size of the sample.

Sometimes you have to go deep in the pouch for a salary survey. The amounts run into the thousands of dollars. If you participate in a study yourself, you often lose less or even nothing at all.

Some well-known salary surveys for employers:

- National Remuneration Survey of Human Capital Group
- Remuneration investigation of De Breed & Partners
- Remuneration surveys from Berenschot

Although this salary survey is primarily aimed at employees, you can also use the Salary Compass from Intermediair. This gives you an indication of salaries in a large number of branches and positions.

You can also find information about salaries in employee advertisements. They sometimes contain a salary indication.

Step 2. What else can you offer?

You may not be able to offer employees a great basic salary (yet). With additional secondary employment conditions you compensate for that meager salary proposal. These extras are appreciated by many employees.

Examples of secondary employment conditions:

- thirteenth month
- lease car
- education or training
- smartphone, tablet or laptop
- retirement
- Day-care
- working from home

Some people are willing to accept a lower salary if these extras are in return. For example, childcare and the ability to work from home are very popular. Try as much as possible to match the needs of the employee.

Are you dealing with a mandatory collective agreement? Bear in mind that you must offer a number of secondary employment conditions under the collective labor agreement. In most cases, you can deviate from the collective labor agreement in a positive sense, so that you can still offer something extra.

Step 3. How much does that cost me?

Ultimately, of course, you want to know if you can pay for this as an employer. In addition, it's good to know that the costs of an employee are always more than his gross salary. As an employer you pay a number of mandatory contributions and reservations. Expect that 20 to 35 percent will be added to the gross salary.

You're in any case required to pay the minimum wage and the holiday allowance. The government adjusts the minimum wage twice a year. In addition, a mandatory collective agreement may also prescribe a minimum wage that's higher than the statutory minimum wage. Added to that may be: paid overtime, bonuses and profit distributions.

There are also all sorts of factors that partly determine the level of the salary. Then you can think of:

- educational attainment
- responsibilities
- work experience
- possible scarcity on the labor market
- the region you're looking for.

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