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Importance of Competitive Salary

February 8, 2021

By Vahid Haghzare, Director Silicon Valley Associates Recruitment &
Victor Chen, Senior Recruiter, Silicon Valley Associates Recruitment 


One of the top IT Recruitment Agencies in Hong Kong SARDubai, Shenzhen, Shanghai, Singapore, and Japan, SVA Recruitment is an IT and employment agency that provides jobs, executive search, and recruitment services.

Why Paying a Competitive Salary is Important?

One of the common mistakes for employers is overlooking the importance of providing a competitive salary to their employees. This is because they see it as an expense when, supposedly, it is an investment.

Silicon Valley Associates Recruitment offers you some of the major reasons why paying your employees a competitive salary is important.

First of all, what does it mean to pay a ‘competitive’ salary? This basically means the salary you pay to your employees is comparable to the market. For instance, for a similar job, a competitive salary is equal to or above the standard offered by companies in the same industry or geographical area. A common HR practice offers within 10% above or below the market average for a job as a basis for competitive pay.

1. Paying Less Tends to be more Costly

It is essential for employers to consider that one of the primary reasons for employee turnover is salary. Employees who feel they are not well compensated tend to look for other higher-paid work elsewhere, quit, and move on. And this costs companies a huge amount of money because it is costly to recruit and train new employees for replacement. Therefore, the cost of hiring a new employee exceeds the amount of money you think you saved by offering lower salaries.

2. Low Pay could Demotivate Employees

Salary is a primary extrinsic motivator for employees. And we cannot deny that we work because we wanted to be paid fairly. Workers that feel they’re being paid fairly are more likely to stay motivated and go the extra mile to help your company achieve its goals. So when employees feel they are paid less than others who have a similar job to theirs, they can get demotivated and less invested in their work.


What is even worse about this is that demotivating employees could adversely impact their productivity and morale. They might devote little to their work and spend their time looking for another job. People who are willing to work for low salaries might not see it worth their time to bring value or optimal productivity to the organization but rather as a stepping stone for a better job. This could lead to employee turnover and constantly leave you with new employees who are training. You get what you pay for.

3. High Pay Improves Motivation and Productivity

On the other side, employees are heavily motivated with higher pay. This would make them feel valued and appreciated, which enhances employee performance and productivity. A happy and motivated employee treats clients with passion. In turn, employers can demand a higher quality output from them.

4. Top Talents are Attracted to High Salaries

Talented employees know what they’re worth. When your company is not offering a competitive salary, then they won’t likely buy in the job offer. This could hinder companies from scouting talented employees to their desire. And there are many top candidates in the market. If their value does not meet with your salary offer, then they will likely end up with your competition. And this could become a threat to you because their capabilities can enhance the competitor’s performance over yours.


5. Higher Pay Improve the Company’s Stakeholders

So when employers invest in their employees, they will have more economic opportunities to improve their lifestyle. Employees who have more money will also spend more money. And this would boost not only their well-being but also in the community where your business is operating. Your business can benefit from it. As an old adage says, what goes around, comes around. This cycle applies to your business as well.

What Should You do?

Take advantage of paying a competitive salary! Looking over its benefits and disadvantages, we can conclude that how we pay our employees play a crucial factor in the company’s performance. Paying a competitive salary also benefits hiring managers from getting rid of employee turnover and constant recruitment process to new employees' training.


Employers must not take their employees as a financial burden but rather as an investment for growth, improvement, and success. Aside from the salary aspect, it is also important to consider other factors that motivate employee and business growth. This includes training and team-building activities which enhance employee relationships, acquiring new skills and knowledge, and establishing a positive organizational culture.


How to Determine Competitive Pay?

Employees that make lower wages, especially those at minimum wage, can struggle to make ends meet. This can adversely affect their performance and living conditions

Silicon Valley Associates Recruitment teaches you how to determine a competitive salary.

Industry Trends and Market.

  • You have to take into account the trends and market performance of your company. Find out what your competitors offer for a similar position, taking into account your company’s industry and size.

Benchmark Salaries and Benefits

  • Research salary guide and employee feedback aligned to your target or chosen position to know the range and what to expect in your salary

Location and Cost of Living

  • Consider where your business is located. Salaries vary from state to state and even city to city, so research nearby pay rates and the cost of living in your area.

Supply and Demand

  • Employers who look for specific or highly qualified skills and qualifications more likely to offer high salaries to attract candidates.


Benefits, Incentives, and Bonuses

  • While benchmarking and researching a salary guide, you can also research the required and potential benefits and incentives you can get from the company




Silicon Valley Associates is ideally positioned to support the continual demand from tech companies and IT Departments looking to hire in Hong Kong, Asia, and Worldwide. Please let us know if you would further advise on the above topic or your hiring needs


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