Dear Dakota: How Much Should I Pay an Interior Design Employee? Start here.
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We’ve been getting a lot of questions for our Dear Dakota series about hiring: the process, finding the best employees, paying them, NOT micromanaging them.
Read here to learn more about bringing on your first hire.
Or, if you are not sure what expertise to look for in a hire, read more here.
Or, if you already have a team in place, but need better processes for managing their workflow and team communication, this blog is for you!
And, if hiring is a big question mark and challenge for you in general, check out our Hiring Blueprint for interior design businesses.
In this article we’ll address a very important question:
Dear Dakota, How can I determine the appropriate pay rate for a new hire?
The interior designer who asked this question has been in business for 25 years and is trying to figure out how to pay their degreed employee who is just starting in the industry vs. their mentored employee who learned on the job with them (no degree).
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Getting a new hire’s salary correct is SOOOOOO important. It needs to be high enough to attract high-caliber talent. Providing a competitive salary can also influence a team member’s job satisfaction levels, positively impact retention, and reduce turnover. If your company is known in the marketplace for paying employees well and providing a fair compensation package, you’ll establish a positive reputation, making it easier to attract new talent in the future.
But, you also want to make sure you’re getting a good return on your investment: you neither want to underpay OR overpay when you hire. The initial salary offer establishes a minimum baseline that cannot be reduced once the employee is on staff, even if performance is under par. Although salary increases over time are standard, and expected, an employee’s salary cannot typically be reduced.
Several factors must be considered when determining the starting salary for a position.
Position roles and responsibilities
The employee’s experience and skills
The employee’s education and certifications
The company’s geographic location
The company’s size
Salary Ranges
To accommodate variations in experience, skills, education level, and certifications for the individual who is ultimately chosen for the position, salaries are typically listed within ranges. That provides latitude to align the salary (within the range) to the specific qualifications of the individual chosen for the position.
If—during an employee search—you find a top-notch individual, fresh out of school with little experience, but enormous drive to succeed, you would start that person on the low end of the position salary range, perhaps at the range minimum. Conversely, if you find an individual with a good deal of experience (but not so much as to make them overqualified), and perhaps having some certifications (for a designer, passage of the NCIDQ exam, for instance), then it would only be appropriate to offer that person salary at the high end of the range.
How wide should the range be for the salary for a specific position? A range of 30% has been found to be the most commonly used salary range by employers. That means the range extends 15% upwards and 15% downward from the midpoint in the range. A salary range where the midpoint is $50k would vary from $42,500 ($50k less 15%) to $57,500 ($50k plus 15%).
Several states have implemented pay transparency legislation, meaning that employers are required to provide salary ranges in job postings or job advertisements. States also may require that details about pay and benefits be shared during the interview and hiring process. Check here for the pay transparency requirements in your state.
The Job Description
The first step in determining a salary range for a new position is developing a detailed job description. It should include:
The position title
A description of the position tasks and responsibilities, and anything the person in this position will handle
The required education, qualifications, and skills a person must possess to qualify for the position
Position goals: What will the person in this position be expected to accomplish?
Location and hours information: where will this person work, and what general hours will be involved?
Hierarchy: Who will supervise the person in this position? Will this person supervise others?
Relationship and interaction information: With whom will this person interact? What relationships exist with others in the organization?
Particular job demands: Will travel be involved, and if so, how much? Are there any other time or physical demands to complete the job?
Candidate temperament requirements: Are there any specific personality traits needed to succeed in the position, or with the company?
Performance evaluation: a job description may also include information and timing for performance reviews
Other compensation: a job description may also include information about health insurance coverage, commissions or bonuses, paid time off, sick pay, and any other job perks.
A well-developed job description—that includes the specific tasks, responsibilities and qualifications for the position—will help a business owner understand the job holder’s value within the organization. That is the first step in figuring out an appropriate pay range.
Industry Research
The Bureau of Labor Statistics provides salary data for a wide range of job titles, as well as related information such as career outlook and typical work environment. Here is the page for the interior design profession, showing the national median pay.
If you are hiring an Administrative Assistant, a Bookkeeper, an Office Manager, or some other position for your business, similar data can be found for all these positions on The Bureau of Labor Statistics website.
ASID (American Society of Interior Designers) also provides annual data regarding salaries for interior designers. Their data includes additional information on state and city salary variations, and commonly offered benefits.
Specific Market Research
You may also want to conduct compensation benchmarking with other similar firms in your area, to make sure your salary offering aligns with the standards in your particular market. If you are in a pay transparency state, you can observe the pay ranges from job postings from other interior design businesses who may be your competitors. If you have friendly relationships with other interior design business owners, you may find that they are willing to share their pay ranges, in exchange for similar information sharing from you. Or, you can check with your local ASID chapter office to see if they have any market-specific data.
If the employee will be working remotely (at a location that is different from where the owner works), you should consider the employee’s home city or state location in determining appropriate pay. For instance, if the design business is located in Chicago but the employee will be working remotely from their home in Arkansas, you would look at equitable pay ranges for the Arkansas area, which likely will be significantly lower than in Chicago.
Internal Equity and Budget Considerations
Once you have determined the appropriate pay range for a new position, you may want to consider just a few other factors. If you have existing employees, consider their compensation in relation to their pay rate and responsibilities. Having pay equity among team members (so that one individual does not make a lot more or less, depending on hierarchy) is essential to team morale.
And of course, the salary you intend to offer to a new hire needs to align with the company’s budget and overall financial health. Consider negotiation implications as well. The number you quote to a new hire may only be the starting point. That new hire may ask for an increase to your initial salary offer.
Future Considerations for Pay
It is standard that performance reviews and potential pay raises occur annually. This may be timed to an employee’s hire date, or aligned with a specific date where you review all company employees.
To move up within the salary range for the position, an employee must meet or exceed all responsibilities included in their job description. You will establish Key Performance Indicators (or KPIs) to use in your review of an employee’s performance and progress towards goals.
KPIs should be specific and measurable. Determine what is expected (based on the job description), and how achievements can be measured. This will form the framework for performance reviews and evaluations.
And, once you determine the pay rate, my favorite software for actually getting that money into your employees’ bank is Gusto. They handle EVERYTHING. All the filings, reports, tax payments, etc. Highly recommend!
**I’m an affiliate for Gusto and may earn a commission if you sign up through my link, but I only recommend software I use and love.
Ready to Hire Without the Overwhelm? Here’s Your Next Step.
Growing your team is an investment in your company, and when done right, it's one of the most powerful ways to scale without burning out. But before you hire, you need to know what you're handing off. This means having your processes out of your head and into a system.
That's exactly what we help interior designers do inside The Designed to Scale® Method. Learn more here.
Free Hiring Masterclass Series
Missed the other lessons in our Hiring Masterclass Series? Here they are.
Lesson 1: Dear Dakota: I'm Feeling Maxed Out!
