Photo: SOCIALisBETTER via Flickr
When making hiring decisions, there is a lot to consider. Will the person jive with your team? How much should you pay them? Do they have the necessary work experience? When weighing everything a candidate offers, it’s hard to know which qualities should take priority.
If you’re wondering whether it’s better to hire an experienced person at a higher salary, or a less experienced (and less expensive) individual who has potential, just use some simple maths. Michelle Berg, President of Elevated HR Solutions, suggests calculating the projected return on investment based on a salary equation.
A salary equation has four factors:
- What can your business afford (how are they doing in comparison to budgeted and projected revenue)?
- What is the least amount of education and experience needed for the candidate to be successful in the position?
- What is the performance are you expecting (How fast must this position be off the ground and running)?
- What is the external market paying?
All things considered, the decision to go with experience or potential depends on your company’s situation. If you have less time to train someone and your company has enough budget, then pick a candidate with proper work experience If you don’t have time or much budget, pay someone with potential a lower salary and hope that, as they learn, they become a valuable investment.
Loyalty is an obvious factor missing from the salary equation. But according to Berg, “You don’t pay for loyalty – because it’s almost a bribe. You don’t train for loyalty – because a better pay check can always be found. Loyalty has nothing to do with salary.”
Read how other people answered this question at Inc.com >>
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