Savvy employers recognize that offering competitive pay isn't just about matching market rates —  it's about attracting exceptional talent and keeping them for the long term. 

Here’s a guide to competitive pay, plus how combining it with other forms of compensation creates stronger offerings.

Competitive pay refers to salaries that match or go beyond the industry standard for similar roles, experience, and location. Usually, it appears as a range, which employers can adjust based on individual employees and roles. Competitive pay is a key part of a total compensation package, which includes base salary, benefits, bonuses, and career growth opportunities.

Cost of living plays a critical role in defining competitive pay. For example, a competitive salary for a software developer in San Francisco might look very different from one in Phoenix — even for the same role at the same company. Some employers factor in these geographical differences when setting competitive pay ranges.

The talent market also affects what classifies as a competitive salary or benefits package. When qualified candidates are hard to find, employers often need to use more attractive compensation to recruit the right people. This might mean going above the typical market rate or providing unique benefits packages that set a job offer apart, like stock options, paid time off, or premium retirement plans.

With 78% of Americans living paycheck to paycheck, competitive compensation leads to more than just talent retention. It gives employees the financial stability they need to focus on their work.

Here are a few reasons why competitive compensation matters:

Competitive pay makes companies stand out to talent. With more applications coming in, employers can be more selective about who they hire, leading to optimal teams.

Research shows that high compensation leads to high job satisfaction, encouraging employees to stay in their positions longer. Less employee turnover means less time spent on recruiting, training, and managing the disruptions that come with staff changes.

An effective competitive pay strategy reinforces an employer’s commitment to their teams. It shows that they value the people they hire—which builds an employer brand that attracts and retains employees. 

Motivated employees do better jobs, leading to faster project completion and high-quality work. This bolsters business growth and brings in more profits, strengthening employers’ returns on investment.

Staying competitive requires regular market research. It's a good idea to periodically benchmark compensation against industry standards to make sure salary bands remain attractive to current and potential employees.

Here are some of the biggest influences on competitive pay in today's market:

Employers need to understand both the core responsibilities and the specialized skills each position demands to set competitive salary rates. A senior software developer's compensation looks very different from an entry-level marketer's pay.  Roles that demand rare skills or a lot of experience command higher compensation to attract qualified talent. 

What counts as competitive pay depends on the industry and market conditions, even for similar roles. Employers should research average ranges in their area by analyzing competitor salaries and referencing salary aggregation tools like Indeed and Glassdoor.

When qualified candidates are scarce, competitive pay rates typically increase. Employers often need to adjust their compensation packages based on how many skilled professionals are available in their market.

Location and cost of living also influence what counts as competitive pay. Employees living in cities with higher costs of living need higher salaries to live comfortably.

Not all companies are positioned to offer high salaries. Employers should be realistic about what they can offer to avoid affecting their financial health.

To create truly competitive compensation packages, employers need to think about a variety of key components that matter to today's employees.

Here's what goes into a competitive package:

The foundation of any compensation package is a competitive salary that matches or exceeds the average for the role, experience, and industry. This is the fixed amount employees earn before bonuses, commissions, and other additions. Employers need to make sure base pay remains competitive through regular market analysis and adjustments.

Stock options, bonuses, and commission structures give employees ways to earn beyond their base salary. These variable factors enable the most productive staff to increase their total compensation through strong performance.

A comprehensive benefits package includes medical, dental, and vision coverage. Given the cost of health insurance and its importance to quality of life, health benefits are among the most valued aspects of compensation. 

Many employers offer benefits that increase employee well-being, like flexible remote work and mental health resources. This also includes physical health initiatives like gym memberships and workplace fitness challenges.

Competitive compensation often includes retirement plan options, which can take the form of matching employee contributions or multiple investment choices.

While retirement plans are important for long-term financial wellness, many employers offer additional benefits that help employees day-to-day, like Earned Wage Access. EWA provides teams with the financial flexibility they need. With EarnIn, employees can access their pay the same day they work, starting at $2.99 per transfer,¹ with the ability to get up to $150 per day, with a max of $750 between paydays.²

Employees value their time. An attractive paid time off policy is an essential part of a competitive compensation package. This might mean offering generous vacation time, sick leave, or personal days.

Here's how to develop an approach to a competitive pay and benefits package:

Industry standards aren't everything, but that doesn't mean they aren't important. Knowing what others pay helps employers set realistic salary ranges. 

Research pay rates across a company’s industry and location. Look at base salaries, bonuses, and other forms of compensation, and use this information to plan accordingly.

A good competitive salary strategy starts with clear objectives. Maybe a company wants to lead the market with high salaries, or balance competitive pay with exceptional benefits and paid time off. Either way, it needs a clear vision that matches its business plan.

Research each role — its popularity, skill and experience requirements, and seniority. Positions that are new or less common might require higher salaries to attract the few people who meet the requirements. At this stage, keep wage compression in mind to avoid paying new hires more than senior employees.

Define clear salary brackets for each position level. These ranges guide compensation decisions, from making competitive job offers to planning raises for current employees. Make sure each range has room to reward performance while staying competitive.

Market rates and employee needs change constantly. Regular reviews keep salaries attractive to both new and current employees. This ongoing attention aligns compensation with what top talent expects and what current teams desire.

Competitive pay is essential for attracting top talent and demonstrating a company’s commitment to its employees. It not only helps reduce turnover but also fosters a more engaged and motivated workforce. However, even with strong compensation, employees may still experience financial stress due to unexpected expenses or gaps between paychecks. That’s why offering benefits that enhance financial flexibility, like earned wage access, is just as important as salary.

With EarnIn, businesses can help empower employees to take control of their financial well-being. On-demand pay allows employees to access up to $150 per day, with a max of $750 between paychecks,² helping them manage everyday expenses or unexpected costs. Employees can get their pay the same day they work starting at just $2.99 per transfer¹, giving them greater control over their finances when they need it most. Additional features like Tip Yourself³ support better saving habits, while Credit Monitoring⁴ keeps employees informed about their credit health. Best of all, EarnIn is free for employers and requires no integration, making it a seamless way to strengthen your total compensation package and support your workforce.

Enhance competitive pay with EarnIn.