Salary Rationale - Builder Academy

In a small construction business, one individual may have many roles.
It may be difficult to establish a competitive salary level for such an employee.
This tool provides an intuitive method for doing so.
Save a copy of the file to your Employee folder.

First, create a compensation database for positions in your company.
- A number of roles are defaulted in the database. These roles are editable.
- Additional roles can be added in the green-shaded cells below the defaulted roles.
Second, determine a competitive salary range for each role you wish to include.
- Information is available from a number of sources – local recruiters, job listings, peer companies, etc.
- I have included an AI prompt which can be used very effectively.
- Edit the prompt as desired.
Optionally, use the “Source” column to document where the salary information came from.

The Experience Modification allows for adjustment of the salary range based on years of experience.
- You can include total years of experience in the role, or
- Years of service in your organization.
Accept the default information or customize as you wish.
- There are up to five ranges which can be used.
- The “% Average” column is a multiplier which recognizes that an employee becomes more valuable with increased tenure in the company.

Complete the employee information requested in the green-shaded cells at the top of the form.
- For hourly employees, hourly wage x 40 hours/week x 52 weeks/year = annual compensation.
Select the “Experience Modifier” level to use in the analysis.
Set the “Compare ” column to Average as a standard. You are already adjusting for experience. You can use “Low” or “High” as additional modifiers.
Begin entering the role(s) this employee fills in your organization.
- Some employees will fill one role.
- Some employees will fill several roles.
For employees who fill several roles, estimate the percent of their time working in each role.
- Example – The Office Manager (60%) may also handle Contract Management (20%), Purchasing (10%), and HR Management (10%).
- Enter the roles and appropriate percentages in the form.
- The total percentages must equal 100%. If they do not, you will receive a “Check Math” warning.
Create and print a PDF of the document for each employee file.

This form is infinitely adaptable.
Use it to justify the annual salaries you are paying your employees.
Use it to ensure that the salaries you are paying are competitive. You do not want valuable employees being poached by other companies.
You may want to have the employee sit in with you as you create the Employee Salary Rationale.
- Be sure you have created the Company Database prior to the meeting.
- I would advise running the calculations for yourself prior to the meeting to avoid any nasty surprises.
- Ask them which roles they see themselves performing, and the percentage of their time spent on each role.
- This can be a very informative exercise for both you and the employee–
  - You will see how the employee views his or her overall contribution to the company.
  - It will help the employee understand how their compensation is calculated.