Wages and compensation

It's important to understand the difference between wages and compensation. Wages are the money paid to an employee for their work, usually calculated based on an hourly rate or a salary. Compensation is wages and additional benefits that employees receive, like personal time off or health insurance. 

Salary benchmarking is a way to determine what fair compensation looks like for an open position. Gather data from similar positions at other child care businesses and review the offered wages and compensation to determine what fair compensation looks like for your area. Use the following steps:  

Step 1: clarify the job and pool  

Describe in detail the position you're hiring for, potential candidates understand exactly what you’re looking for. Include the specifics you need, including hours worked, job title, tasks and what kind of background, experience, and skills you want your new employee to have.  

Next, think about the pool you'll be hiring from, including location, education, and stage of career of your most suitable candidate. Are you looking for a local, early-career applicant or offering an incentive for an experienced director to move to your area?

Step 2: identify similar organizations  

Next, find 15-20 child care businesses similar to yours and preferably nearby. Use the internet to search for other organizations that are both local and nonlocal that provide similar services to yours. You're looking for child care businesses that advertise for roles that have similar requirements and job functions to what you need. 

Step 3: collect data  

Search job listings and hiring ads to find descriptions like the role that you're hiring for. Look at the pay and benefits these child care businesses are advertising and experience, education, and other requirements they list. You can also check salary sites for insight on compensation offered. Note the wages and compensation offered for each listing you find.   

Step 4: analyze results  

You should have a list of similar child care businesses to yours and the wages and compensation they offer employees. List the salaries you’ve collected from lowest to highest. Usually, these fall within a similar range. Ignore any salaries that are much higher or lower than the others.  

Where does the salary you plan to offer fall with the others? To offer competitive pay, you want to fall within the upper 50% of the salaries you’ve collected. Consider total compensation, including PTO the other child care businesses are offering. What do their healthcare and retirement plans look like? If you find that your offered compensation falls low on the scale, consider paying the more and/or offering more benefits.  

Common benefits are personal time off (PTO), overtime pay, health care, and retirement. Think about offering a discount for employees’ children, and find professional development opportunities for your staff, like training classes and certifications. Maybe offer a health and wellness stipend to help with gym and fitness membership costs. Think of unique and helpful ways to support your staff!