Jan 15, 2006

How do companies arrive at a compensation structure ?

Do companies really know how much they have to pay a new recruit ?
Either they decide upon a pay ( to match the competition) and appoint a candidate for that salary.
Or they try and make the candidate accept their offer, literally negotiate with the person.
Obviously the results are diverse.
The first one still doesn't solve the attrition problem, worse it can impact the morale of the old hands in the organisation..
The second option would leave you with candidates who feels short-changed after the initial euphoria dies down.
Alternatively the best bet would be to decide what your company can afford and then recruit a suitable talent.
Because if a employee is coming in just for the money, he isn't worth your time.