217. The Small Business Guide to Setting Salaries and Avoiding Pay Drama

In this episode of World’s Greatest Boss, Jackie Koch tackles one of the biggest challenges for business owners: how to determine what to pay employees. From understanding market rates to building a compensation structure that aligns with your business goals, Jackie walks you through a practical framework that balances what your company can afford with what it takes to attract and keep great talent.

You’ll learn how to assess if you’re ready to hire, how to research market rates (without paying for expensive surveys), and what to do if you can’t meet market pay. Jackie also dives into how to set up job levels and pay ranges that scale as your business grows, and why transparent communication about compensation is key to building trust with your team.

By the end of this episode, you’ll have a game plan for creating a fair and competitive compensation strategy — without losing sleep over it.

What You’ll Hear in This Episode:

[02:15] Questions to Ask Before Hiring — Why looking beyond finance (and thinking about team strategy) is critical before making a hire.

[07:05] Understanding Market Rates and How to Research Them — Where to look for salary data without overpaying for reports.

[15:40] What to Do If You Can’t Pay Market Rates — Creative alternatives like contractors, junior hires, and strengthening your value proposition.

[21:50] Building Job Levels and Salary Ranges — How to structure pay based on responsibility and expertise — even as a small team.

[30:05] Variable Pay Options — Bonuses, commissions, and profit sharing to supplement base pay.

[35:40] Why Transparent Compensation Conversations Matter — Avoiding awkward (and potentially costly) surprises.

[42:15] Different Types of Raises and How to Plan for Them — Performance raises, cost of living adjustments, and promotions.

[47:30] Common Mistakes to Avoid — Like overpaying “irreplaceable” employees and creating inequities.

Resources & Links Mentioned:

• Salary research tools: Payscale, Glassdoor, LinkedIn Salary Insights, Salary.com

For more HR and hiring insights, visit: peopleprinciples.co

Connect with Jackie on LinkedIn: linkedin.com/in/jackiemkoch