By: Teresa Hundt
Compensation is often a huge factor in deciding what jobs we take.
I’m a good example of this. After years in education, I became a recruiter to provide my daughter a better life than I could as an educator.
We all have bills to pay. Mortgages or rent, car payments, electricity, and pesky things like food all cost money. So, most of us work jobs to afford the things we want and need. In addition, many people connect the money they make to their identity and self-worth. It shows they have worked their way up the ladder or demonstrated some serious expertise in an area.
For the most part, people just want to be paid fairly for their skills, knowledge, and the hard work they put in.
Compensation as a Hiring Challenge
Compensation is another stumbling block to finding the right person on a tough opening.
The goal of the compensation conversation should be to find a number that is fair and reasonable for both sides. You want everyone to feel validated when it’s time to start a new professional relationship. But this isn’t always the way people look at it.
A common problem we see when taking searches from clients is that they can’t, or won’t, pay fair market value for the opening they’re trying to fill. They’re looking for an A+ candidate with 20 years of industry-specific experience, a BSEE, an MBA, the person has to be left-handed, with great leadership skills, and experience with unions. But when they tell me their compensation range, it’s what a mid-C range candidate makes. You’re just not going to find success this way.
Whether the problem is that you can’t pay fair market value, or maybe that you just don’t want to, there are three possible solutions:
· Find the money to pay fair market value anyway.
· Filling the gap with other job perks.
· Lower your expectations.
Finding the Money to Pay Fair Market Value:
The argument for finding this money comes down to this – how much is it going to cost your company to have the role empty, or to have the wrong person in the role?
Will a bad hire make good employees leave? How much machine downtime might occur because the person you hired just didn’t have the juice to do the job? What is the opportunity cost if things stay the same, when the right person could have taken you to the next level?
If the role remains unfilled, will you burn people on your team out as they do multiple jobs, but only get paid for one? How will the bad morale that stems from this affect your facility’s production? And can the existing team even cover it all?
Paying your new hire a few extra thousand dollars each year is pocket change compared to the cost of not having the right person in the role. Especially in the giant corporations of our industry, this should be a no-brainer.
Filling the Gap with Other Job Perks:
Speaking of giant corporations, I often hear that compensation is low because corporate sets it at that level and won’t budge. On the other hand, some smaller companies run with such a tight budget that they can’t keep up with market value compensation to begin with.
If there is absolutely nothing you can do to make an offer at fair market value, you have to get creative to attract an A+ candidate.
I have seen clients offer sign-on bonuses, extra relocation support, company cars, extra vacation, and many other things to try to attract the right people. Some companies can’t pay as much, but offer incredible, fully-subsidized health insurance or higher-than-normal 401K matching.
My Director of Operations just told me there’s a professional baseball player that has a certain number of Disneyland tickets written into his contract each year so he can take his kids!
The bottom line is that there are a lot of creative ways you can sweeten the pot if you’re limited on what you can offer for compensation. Find out what is important to the potential new hire and see how you can make up the compensation difference in that area.
The last step, if you can’t find the money to pay fair market value or add other incentives, is to change your expectations for the position to match the budget.
One way to do this is to consider whether the role really needs four-year degree. Does learning in a classroom give a person something they need for this role, but might not have from practical experience?
Another way you can adjust your expectations to fit your budget is to consider a candidate that is greener in the industry. If you have a strong, highly experienced team around them, can you bring in a candidate with less experience and train them in what they need to know?
This path comes with the added advantage of fresh eyes in your facility. Someone with less experience hasn’t learned bad habits and isn’t set in one way of doing things. They bring a different viewpoint to discussions, as their perspective isn’t tainted by industry norms yet.
In any case, if you can’t change the budget or find creative ways to make it up, your only reasonable option is to adjust your expectations accordingly.
Conclusion: Chasing Unicorns
There are exceptions to every rule. You might find a unicorn that is willing to accept lower compensation and has all the experience, education, and skills you want.
If they want a less demanding job, better hours, or a lower stress level, a well-qualified candidate might change companies and take a pay cut. They might just need to get to a new location for family or other reasons. It could work out for you.
But as a recruiter, it’s a red flag when A+ candidates are willing to go somewhere for C+ money. Usually, they’re out of work and desperately have to accept the first thing they find.
There are many other reasons a qualified candidate would accept a compensation that is lower than industry standard, but most of them are not very good. In my experience, the unicorn you hire at a lower rate usually turns out to be a horse with a carrot taped to its head, and you end up back at square one within the year.
So, the next time you have a position that has been open for a long time, consider whether the compensation range is appropriate for the role, and what the right approach is if it doesn’t measure up. Or call up your favorite recruiter and ask!
And, as always…
Never Let the Boxes Get You Down!