How Much Are Key Employees Worth?

Timely tips for calculating the right pay package for big decision-makers.

In Pictures: How To Calculate What Key Employees Are Worth

With the economy tanking and unemployment nearing 7%, it's a buyer's market for firms lucky enough to be hiring. The challenge: landing loyal talent without going broke in the process--either by losing valuable hours rooting through piles of résumés or dangling profit-sapping salaries.

"A buyers' market doesn't mean that it's any easier," says John Younger, chief executive of Accolo, a Larkspur, Calif., staffing company for the software industry. "Hiring tends to consume more resources than it did before. You place an ad on Craigslist and get people bugging you for weeks."
So what are key decision-makers really worth? Unfortunately, there is no one formula that transcends industries and business cycles. Tackle the problem in logical steps, though, and you can increase your odds of earning a solid return on that important player. Potential applicants can learn a thing or two from this process, too.