A step-by-step guide to paying workers fairly


Starting your own company is never easy, and parting with your hard-won capital can be downright painful. Nevertheless, it’s a part of doing business, and if you can’t figure out a way to compensate your employees fairly, you’re going to have a hard time finding and retaining enough talent to get your idea off the ground, let alone excel.

Here’s how to make sure your employees know they’re valued – even if you can’t pay for their weddings.

Designing your roles

While it may go against the entrepreneurial grain, the first thing to do is acknowledge that you can’t do everything yourself. You have finite time, energy and skills, and a part-time marketing professional may be a more cost-effective proposition than teaching yourself Photoshop at three in the morning.

If marketing is a key concern for you, perhaps it’s worth dedicating an entire job to it. Likewise, consider if you could collapse two roles requiring similar skills into one (without overworking a staff member). Your part-time marketing person might become a full-time marketing and sales person.

Taking the time to appropriately design the roles you’re offering will save you many headaches later on.

What’s the most you’re willing to pay?

The first thing to ask yourself when deciding a pay ceiling is this: How much value will this position add to my company? Arriving at a dollar-per-hour figure would be ideal, but this can be tricky, especially for roles involving knowledge-work. Give it a go anyway.

A good way to get a feel for appropriate pay ranges is to look at similar positions at other companies (keeping in mind that you probably won’t be able to match corporate salaries). Average out the salaries you find, and then compare this to your answer to our first question (the value the position will add to your business) to see how your compensation package will compete on the market. You may or may not have to raise your pay ceiling accordingly.

What’s the least?

You might be hoping another superhuman entrepreneurial type will walk through that door, someone willing to put in the long nights and wade through endless tasks on minimal pay, but not everyone will have the same passion for your business as you. Consider if you could reasonably expect someone to meet all the tasks you have in mind for them each day. Then decide how much you’d expect to be paid for doing the same role.

It’s fine to have your offering below the average – as long as it’s not too low. And remember, whatever the baby boomers tell us, unpaid overtime is not an implied part of any job.

The Fair Work Ombudsman has a service that lets you calculate the minimum wage for your employees. Keep in mind that compensation of workers is subject to certain legal requirements – you may want to go over your proposals with your lawyer before finalising them.

Decide on the type of pay

To get simple, you have fixed salary, hourly pay, and commission pay. The rules of thumb for deciding which pay is suitable for which worker is as follows: fixed salary for knowledge- or skill-based jobs (e.g. marketing or management), hourly pay for time-dependent positions (things like product assembly) and commission pay for employees who bring in revenue (like salespeople). Consider carefully the fairest pay structure for each position.

Remember that money isn’t everything

There are a lot of people out there willing to take a lower-paying job if the company seems like a good place to work (given that the wage is liveable). By offering flexibility, a supportive culture, exciting training opportunities, or other intangible benefits of working for your company, you’ll be more likely to attract and retain talent without having to match the gross wages of corporate positions.

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