Determination of a Competitive Salary

Subject: Employee Management
Pages: 1
Words: 284
Reading time:
2 min
Study level: Bachelor

One of the most effective ways applied to determine a competitive pay is through examination of the retention and turnover patterns of other companies in the same industry. A competitive pay by an employer leads to an increased level of motivation and reduced turnover rate (Nigro, et al. 2012). If a company is not able to offer a competitive pay it may experience problems with recruitment and retention as well as high turnover rate. Companies that have competitive pay rates, have low turnover rate and high retention rate.

Another way to evaluate competitive pay is through analysis of the prevailing pay rates. The prevailing pay rates help employees understand the acceptable salary range of their specific job in an industry and within a geographical region (Nigro, et al. 2012). Pay rates indicate a market price of a job which helps understand if an employee is being underpaid, overpaid or within the acceptable pay rate in the respective industry.

Job ranking, job description and job evaluation have also been instrumental in determination of a competitive salary. Jobs of the same grading and ranking within the same industry should have a similar pay range (Nigro, et al. 2012). Similarly, through the process of job classification which is done by evaluation standards, an employee can estimate the level of job value, therefore estimating its competitive pay within an industry. Moreover, positions with similar description should have a related if not equal salary range. Another crucial tool in estimation of salary range is the job pricing (Nigro, et al. 2012). Jobs that are closely related have the same pay structures. Employees should learn and compare the available pay structures to find out if they get a competitive pay.


Nigro, L. G., Nigro, F. A., & Kellough, J. E. (2012). The new public personnel administration. Cengage Learning.