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The Best Way to Determine Employee Salary Amount

Paying salaries is the company’s obligation to its employees. But, the amount of employee salary differs between one region and another. Even for the same job, the number of employee salaries can differ from one company to another.

Not without reason, the difference in the amount of this salary is determined based on a number of considerations from the Human Resources Department (HRD) of the company where he works. Although many companies have used HR software, as an HRD you still have to know this before determining the salary for your employees. If you’re still not sure how to determine an employee’s salary, keep reading this article to find out how.



1. Do Some Research

Employee salary

The easiest way to determine your employee salary amount is by researching the amount of salary of that position in another company. Make sure your reference company location is not too far from your company location.

For example, do not compare the salary for a marketing position in a company located in Vietnam with those in Singapore. The reason is living expenses. You certainly don’t want to give a salary that is too high or too low because it is not in accordance with your region’s living expenses, right?

Another reason is competition. Giving a low salary can result in your employee moving to a competitor company that might be able to provide a higher salary.

2. Let Employees Negotiate their Salary

During job interviews, salary negotiations frequently happen. However, there are very few companies that allow employees to negotiate salaries, even though they have worked for years.

It’s best to let your loyal employees negotiate their salary. This can increase the morale of your employees and make them feel appreciated while working in your company.

Not only that but letting your employee negotiate their salary is useful for evaluating the material of that employee. Salary negotiations create opportunities to assess the performance of the employee. You can then improve employee performance through competency management and training

3. Adjust Salary Based on The Living Cost of The Area

As we discussed earlier, you have to adjust the salary based on the living cost of where your office is located. This will affect the happiness of employees working in your company.

A small salary will make your job offer less attractive among job seekers, and too large will definitely harm your company. Adjust the salary component to the standard living costs in your area, so you will ensure the welfare of your employees.

Welfare does not only make employees feel comfortable working with you but will also increase their productivity. In the end, your company will feel the benefit.

4. Make Sure your Company Can Afford the Salary

employee salary

Having multitasker employees is an advantage indeed. The problem is, that such employees often ask for a high salary. This is why it’s important to make sure that your company can afford to pay the requested salary.

To overcome this, you can set the top and bottom limits of the employee’s salary. You can use these limits as a benchmark when recruiting employees. Even if you find a multitalented employee but the salary requested exceeds the top limit, don’t force yourself to recruit him/her, and vice versa. Do not give the employee a salary below the bottom limit you have previously set.

5. Monitor their Contribution

The employee’s contributions to the company will greatly determine how much salary they receive. It’s possible that the employee position in the company doesn’t directly bring profits to the company, but has a big contribution to increasing the productivity of other employees. This is an important point in determining the salary.

Monitoring the contributions of probation employees is also an important thing to do. If during the probation the employee is finished his/her work and responsibilities or has above-average performance, you can consider raising his/her salary after he/she has passed the trial period.


The five ways above are only a small part of many other aspects that you have to consider before determining employee wages. However, the five methods above are the most common things done by HR staff in various countries, including Singapore.

To make it easier for HRD to manage employee administration, especially in companies with a large number of employees, you can use the help of the HRM System from HashMicro. Calculate salaries and PPh 21, manage leave and attendance lists, reimbursement processes, and other operational activities with HR Software and the most complete payroll application for enterprises in Indonesia.

For reading and other tips and tricks about employee wages and salaries, you can click the following link.

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