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​Salary Setting Guidance

At the conclusion of the search process, you have identified the right person for your vacant position. The next step is to formulate your salary offer; but before you do this, it is important to examine a variety of factors. Each of these factors should be considered when determining the appropriate salary to offer

  • The applicant's experience: Specifically, the number of years of industry and relevant functional experience the applicant possesses should be considered.
  • Education: Does the applicant have relevant education, training and/or certifications above and beyond those listed as minimum requirements?
  • Internal equity: Salary equity among internal employees is an important consideration when setting starting salaries. Perceived inequity not only impacts employee morale and motivation but also may trigger contentions of discrimination or grievances. When setting starting salaries, the skills and background of external applicants should be compared to those of internal employees performing similar work, and this comparison should factor into the salary decision. Salary equity does not imply that all employees in similar positions who have similar years of experience and education should be paid the same salary. Recognition of varying levels of skills and performance, for example, will result in differences in salary among employees.
  • The applicant's salary history: An applicant's salary history in positions similar to the position you are filling may be taken into consideration. Attention should be given to the relationship of your position to the applicant's previous positions in terms of responsibilities and required skills.
  • Recruitment difficulties: Individuals who possess skills that are scarce in the labor force may be in higher demand and require additional salary consideration. Factors such as the scarcity of qualified applicants, the number of rejected job offers, and the turnover rate for the position should be considered.
  • Other non-salary benefits: When setting salary levels and discussing the opportunity with applicants, focus on the opportunities of the job in conjunction with salary, rather than focusing solely on salary. What does your position and department offer in terms of having a larger budget, greater visibility and increased opportunity for job growth? Do you offer flexible work schedules, a casual work environment, or opportunities for professional development? What other benefits are included with the position that makes up the total compensation package? 
  • Miscellaneous:
    • Is your selected applicant relocating from an area where his/her salary history may not reflect the economic standards of the Boulder area?
    • Are there unique circumstances to be considered?
    • Number of staff previously supervised if position will be a supervisor. How does that match up with the staffing level to be supervised by your position?
    • Special abilities or national recognition can be considered.
    • Consider the length of time before the employee is eligible for a future salary increase. As a matter of retention, you may want to set a higher salary if a future salary increase is 12 + months away. However, you may want to start lower if you anticipate a merited salary increase within the first 6 months of employment. 

Market salary data and the salary range for the position: It is important to know what the market is for similar positions when setting salary. Each position has a salary range, created using relevant market data. 

How to use the salary range:

  • The minimum of the salary range equates to the minimum qualifications required of the position. If an employee meets only the minimum qualifications of the position, they likely should be compensated at or near the minimum of the salary range.
  • The midpoint of the salary range is considered the market value of the position and it is expected that the employee at this salary or above is fully productive in the position and has considerable experience in the job or a directly related position.

Things to keep in mind when making the initial offer:

While the official offer must be in writing in the form of an offer letter, you may have discussions via email, phone or in person about the initial offer. At any time during this process, be sure not to make promises or statements that can be construed as promises, as you may not be able to follow through on them. Those statements can sometimes lead to expensive litigation if you later decide to terminate the employee or determine you cannot complete the hiring process for the applicant. Remember that budget, background check processes, and other unforeseen events can derail the hiring process at times. 

In discussing the offer, do not make statements that imply permanence or a long-term commitment. Colorado is an “at will” state, meaning the employer/employee relationship can be ended at any time by either party. Examples of statements to avoid include:

  • "You'll be with us as long as you can do your job."
  • "You will not be fired without just cause."
  • "You will be here as long as you choose."

Things to consider if your initial offer is rejected:

Sometimes, an applicant will either reject your job offer or ask for a higher salary. The first thing to do when this situation arises is find out exactly why they rejected your offer and if applicable, what salary the applicant wants. This is important information to obtain, even if you ultimately decide not to pursue the applicant any further. It may turn out that your offer wasn't too far from what the applicant wanted, and you may decide that the extra amount is not a problem. Additionally, it may provide valuable insight into recruiting barriers if you are having repeated difficulty making a hire.

The process gets a little trickier if the applicant wants a lot more money than you can or want to pay. There are different approaches to take, depending on your specific situation. 

If the applicant's demands are simply out of the question, but you feel that you want to try to hire this applicant anyway, consider if there is a way to entice the applicant to work for you without paying the higher salary. Are there non-monetary benefits you can offer or emphasize to the applicant? 

If the possibility exists for paying the applicant more (within the salary range), use these questions to help you decide if the applicant’s qualifications are worth paying a higher salary:

  • Does the applicant possess skills that you cannot find anywhere else? If the applicant has skills that far exceed that of any other applicants and they are skills that you desperately need, paying higher may be justified.
  • Is the applicant currently employed elsewhere? Employed people are not as willing to take a job for less than they want. If you really want this person, you may have to meet their salary requirements. If, however, the person is making a lot less (or is unemployed), he or she may be trying to inflate the salary as much as possible but may be willing to take less.
  • Do you see potential growth in the position you are hiring for? This could be a strong selling point to a potential applicant, especially if you see room to increase salary in conjunction with increased responsibility. Also, consider if the applicant appears to have the potential to grow with the position.
  • Were there other applicants who could adequately fill the position? If there were other strong applicants in your applicant pool, you have more flexibility in negotiations.
  • Do you get the sense that the applicant will be a long-term employee? While there's no sure way to predict, if you get the sense that the applicant will be a long-term employee, paying a little more up front may be the best thing to do. If, however, the applicant seems to think of the job as a stepping stone to bigger and better things, think twice about meeting the applicant's salary demands.
  • Do you need to hire someone right away? If you need someone right away, you may have less time to negotiate and must either increase your offer or move to the next best applicant. Decide how long you're willing to let the position remain unfilled in choosing your course of action.
  • Do you have other employees whose salaries will be diminished by offering an applicant more? If you have an employee who has worked for you in a position for a two years and makes $20 per hour, and you hire someone new in a similar position for $20 per hour, you'll create problems for yourself with the senior employee whose years of service and additional experience will not be rewarded with pay that's higher than a newcomer's.

Once you've answered some of these questions, you should be in a better position to decide if you'll pay more, if you'll try to negotiate, or if you'll remain firm on your salary offer.  Finally, it is important to know that these guidelines are not intended to provide an answer to every possible situation presented to you. Please do not hesitate to contact Employment Services for additional guidance.


 Content Editor