What is your remuneration strategy?
The US job market is normally cited as setting salary levels above those for similar roles in different geographies. However, it is hard to generalize as there are significant variances within the US depending on the city, role and level of seniority. For example, the average salary for a developer in Palo Alto is $124k compared to $92k in Texas.
As you would at home, it is worth investing time to set out the principles around which remuneration will be governed. Specifically addressing what level of salaries you wish to pay (i.e. 60th percentile), how and when options will be granted, and whether or not there is a variable pay element will help you implement a consistent strategy.
The salary formula used by Buffer is a useful example of key salary considerations and the weighting assigned between general factors – i.e. location, cost of living, “role value adjustment” – and experience.
When using benchmarking tools such as salary databases, it’s useful to compare your offered salary range to those of the companies you are competing with for talent. This may involve more established businesses than your own.
A compensation philosophy that is fair, competitive, simple and rewards performance will set your company up for success.
• What state regulations and requirements apply to your business?
• Does your business have a consistent policy and formula for how to determine salary levels?
• What will be your Paid Time Off policy?
• Are you aware of the legal implications of Holiday Debt?
• Once you’ve set the strategic principles guiding your company’s compensation policy, it’s worth getting professional support to execute it. Mistakes are costly and easily avoidable with proper counsel.
In the US, the official process of hiring new employees includes filing the following documents:
• Form I9, employee eligibility form • Form W4, employee tax withholding calculation (requirements vary by State)
• Specific State reporting requirements will involve information being provided to the Department of Health and Human Services
• Under federal law, reports must be submitted to the appropriate State agency within 20 calendar days of the date of hire, although some States may require shorter reporting windows
• Each year, Form W2, completed with any new employee SSN and identity details
As this process is subject to change and updates, it is prudent to check with the IRS, city and State regulations. It is worth noting that many payroll providers or PEOs will manage this process and advise on specific filing requirements.
Another important policy to note is Workers’ Compensation Insurance. Employers pay for this insurance and cannot require the employee to contribute to its cost. Workers’ Compensation Insurance covers cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job.
Specialists in the field
Stuart Bagshaw – BAB Leap
Greg Capitolo – Attivo
David Ehrenburg – Early Growth Financial Services