We have all seen those job openings that offer, among other things:
“Competitive pay and benefits package.”
It sounds great of course, who doesn’t want a job that offers a competitive salary, even a higher salary? But it also begs the question: What exactly does a business or human resources department mean when it posts a job that offers a competitive salary, competitive pay, and/or competitive benefits?
Needless to say, it is not minimum wage; it’s more. And frankly, in this tight job market, if you want to attract and retain top talent, it better be a whole lot more.
So let’s take a look at what competitive pay and benefits really mean and how your small business can offer something along those lines (even if it seems unaffordable).
Competitive Pay and Benefits Overview
There are lots of reasons to own your own small business—you get to be the boss and set the rules, you can follow your vision and passion, and, if you do it right, you get to make a difference in your life, that of your family, and for your employees as well.
Like many, I escaped the corporate world because cubicle nation was a bad fit. I had had it with “idiosyncratic” bosses (sarcasm most intended), odd policies, ridiculous hours and deadlines, unrealistic expectations, and, well, work that didn’t work.
But to paraphrase the Great and Powerful Wizard of Oz, when it comes to big business versus small business, there’s one thing they got that we haven’t got:
Truly competitive pay and benefits.
Say what you will about large corporations, but the truth is that they have money, manpower, expertise, resources, salary ranges, retirement plans, benefits, and compensation packages that most small businesses can only dream of. That of course gives them a competitive advantage, which I suppose is good because they need at least one.
A typical solid salary and benefits package would consist of perks like:
- Competitive pay (we’ll drill down on that next)
- Health insurance, life insurance, vision and dental insurance, etc.
- 401(k) retirement plans, or better, matching 401(k) retirement plans
- Career development
- Flexible work and flexible hours (especially now, especially post-COVID)
The challenge, as indicated, for the small business is that such packages are often above what we can pay. We often cannot afford to match the big boys. What is expected by today’s employee and what can you do? Let’s see.
What is an Actual Competitive Salary?
Competitive pay and benefits are of course the main ways that businesses attract top talent. But what competitive pay means for one job seeker—or business or industry—can be very different than what it means for another. It is a vague term that needs some clarification.
Competitive pay can depend on:
- The market rate of pay (average salary) for similar positions (full-time, part-time, management, hourly, whatever)
- Comparative payscale for that particular type of employee
- Industry standards
- Years of experience and education
- References and job title
- Geographical area
If you really want some averages (which, by the way, change based on all the factors above), here are some from the Bureau of Labor Statistics:
The bottom line is that, for “competitive pay” to mean anything, it must mean that you are paying at or above the prevailing wage for that type of job and job description in that industry and locale. Therefore, if you are looking to offer job seekers and employees alike what truly is a competitive salary, you and your hiring manager need to begin by surveying the landscape of comparable positions.
See what similarly situated people are earning. Make sure to compare salaries by size of business, geographic location, experience levels, educational background, and any other similar factors that you consider relevant and applicable.
Beyond that, you also need to look at your bonus and commission structure. What should your raises look like? If you are looking to be competitive, it of course has to go beyond your starting salary or their base pay. Competitive means competitive. For example, according to Zippia.com, the average bonus last year was 11 percent of one’s base salary for exempt employees.
Do You Have to Disclose Pay in Your Job Listings?
It is important to know that some states require employers to specifically state what the pay will actually be. These include:
California, Washington, Maryland, and Rhode Island: In these states, employers are required to state the pay ranges if a job applicant requests that info, or if an employee is changing roles.
Nevada and Connecticut: In Nevada, the pay range must be disclosed after an interview. In Connecticut, it must be disclosed when requested and when the job is offered.
Colorado: All employers must state in the job posting the wage rate for the job, other compensation available, and benefits offered.
A Great Compensation Package Can Make Up for a Less Competitive Salary
The question remains: What can you do if you cannot compete with the big boys in terms of salary when speaking with qualified candidates?
The good news is that pay is only one reason why people work. According to one recent survey, only about half of all employees said that pay was the main factor when applying for a job.
That's because there are many other reasons why people work: to advance in one’s life and career, to learn new skills, for camaraderie, to make a difference, to be a role model, to feel productive, and so on. The secret for the small business is to tap into these other reasons if offering a top-tier salary is not possible.
Indeed, a competitive compensation package can look many different ways. Oh sure, it would be sweet if you could offer the best salary in the land, but small businesses usually can’t, and so for us mere mortals it helps to know that other options are available.
In the compensation package game, “package” is the operative word. Here are additional things to consider and, to the extent possible, include in your competitive compensation package beyond salary:
If you have more than 50 employees, as you well know, you are obligated under the Affordable Care Act to provide your staff with health insurance.
If that applies to you, a fairly easy way to up your compensation game is to increase the benefits offered under your current policy. For example, you could:
- Cover family members under your policy.
- Pay for more of your employees’ premiums.
- Offer more choices in policies.
- Up the providers covered.
- Give everyone on your team extra coverage, like vision insurance, dental, etc. (or at least the chance to buy in via, say, something like Aflac).
- Offer life insurance. It's a bargain and you get bonus points for doing something for your employees’ families too.
Another option, and one that is both affordable and appreciated, is to give your team some sort of wellness incentive or benefit. It could be:
- A gym membership
- Bicycling-to-work incentives, bike parking, etc.
- Hanging a basketball hoop in the parking lot
- Having a massage therapist come into work once a month
- Coupons towards workout options of their choice
There are no federal regulations mandating that you must give employees certain days off—Christmas for example (although, if you don’t, you are a Scrooge for sure!).
Most companies give newer employees major holidays off, usually totaling 10 or 11 days a year. And that’s on top of additional paid time off for vacation or personal time. According to the Bureau of Labor Statistics, the average amount of paid time off given to workers in the U.S. is 10-14 days.
But, Covid changed a lot of things and one of them has to do with time off. Employees got used to working from home, being treated like adults, and making their own schedules. That’s not going to change any time soon.
A new trend is to give staff members a lump sum of time off per year. It could be a certain number of hours, or days, whatever. They can then use that time however they see fit—as personal days off when needed, or sick time, or vacation time or whatever. It's their choice.
Keep in mind, however, that there may be applicable local, state, and federal laws around family and medical leave, military leave, wage and hour restrictions, and so on. So be sure to speak with your lawyer or HR person about whatever paid time off (PTO) plan you look to implement.
Companies that desire to be competitive will offer, at a minimum, a 401(k) retirement plan. While generally, this is not a legal obligation, it is interesting to note that California has now mandated that all businesses with five or more employees must offer a retirement plan to their employees. Similar laws exist or are being put into effect in several places, including in CO, CT, IL, MD, MA, ME, NJ, NY, and OR (read more here).
The real question is whether you can afford to match employee contributions (or whether you even want to). According to UpCounsel.com, matching works out like this:
- 10 percent of employers match 6 percent of annual compensation
- 41 percent match between 0 and 6 percent, and
- 49 percent do not match at all
Since so many small businesses often cannot match, you can really stand out by doing so. It might soften the blow to know that whatever you match is tax deductible.
Giving employees stock options in the company is a winner in two ways:
- First it is a real, usually valuable, tangible benefit
- Second, it gets your team to be invested—literally—in the business
When people have skin in the game, they are more committed, more passionate.
Flexibility and Creativity
For the prototypical small business, this option is often the best, and the most realistic. No, maybe you can’t give stock options, but you can make your office a great place to work. Here are some ideas:
- Offer flexible schedules.
- Give people their birthday as a paid day off.
- Take the team out to a ballgame for no reason.
- Become a pet-friendly workplace.
- Become a family-friendly workplace.
Competitive Pay Means Competitive
Competitive pay and benefits are one of those great-sounding, yet wish-washy terms that says a lot, and nothing, at the same time. For the entrepreneur, what it really means is that you offer your team the best you possibly can, in exchange for them giving you the best they can.
If you don’t, they won’t.
But conversely, if you do, they will. And that’s a true win-win–and what really makes you competitive, fat salary or not.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
5. Introducing a New Product
A happy client may want to expand their business with you.
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I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!