In your hiring process, once you’ve found a candidate you love, how do you decide what compensation to offer a top candidate? Here’s a true story to illustrate some basic principles for making an offer your candidate won’t refuse (to protect anonymity, no real names are used and information has been generalized):
ABC Manufacturing, Inc. recently asked for our recruiting firm’s help in finding a qualified C-level candidate. The person in this key position would lead the plant operation. After we found and presented several good candidates, they chose Myrna, a candidate who was a great fit for their needs. It was time to make an offer…and there entered ABC’s dilemma of how to decide what compensation to offer Myrna.
But that’s the middle of the story. Let’s backtrack a moment to explain something about Amtec’s thorough hiring process. When our experienced recruiters screen candidates, we do our best to learn everything we can about them–past and present experiences as well as future goals.
Here’s where it gets tricky. It’s illegal in many states to inquire about previous/current compensation, but candidates are allowed to share this information voluntarily. And we can ask candidates what they expect to make. Candidates rarely will make a backwards move in their career, title, or compensation, so their sharing this information helps us paint a more complete picture for the potential employer. A company’s decision about what compensation to offer a top candidate is made easier by knowing a job seeker’s current salary and benefits, and understanding the current market rate for a position.
Myrna had shared with our recruiter roughly what she was currently bringing in, a salary she needed to continue making for personal financial reasons. All the candidates for this position had given similar numbers that put the salary Myrna was asking for well within that range. But like many employers, ABC was struggling with her current number. They wondered if perhaps she was just angling for a higher offer, which actually most candidates are. Remember, job seekers aren’t usually looking to move backwards in their career! (When in doubt about the going rate, check Payscale.com for a reliable salary range for any position.)
Here’s where you and every employer can probably identify with the challenge, How do you decide what compensation to offer a top candidate? ABC’s leadership team was torn. Myrna’s skills and experience were exactly what ABC needed, but her expected salary was above their listed budget. They wanted to make an offer high enough for the candidate to accept, but not too high that there would be no room to negotiate.
As you can imagine, our staffing firm has facilitated countless offers since 1959. We’ve advised many employers in performing this balancing act of negotiating with candidates. If your offer is too low, the candidate feels offended. If it’s too high, your budget takes a hit. The challenge is, with a candidate like Myrna, she has already been clear about her current wages and her future needs. And because it is a candidate’s market, Myrna can easily find other interested employers–probably a lot more easily than you can find another candidate who is such a good fit.
If you were ABC, what would you offer? Assuming that your candidate has the skills and experience you’re seeking, here’s what you should consider to begin negotiations and to keep from losing a great candidate:
Our employment agency is great at finding top candidates, but the current market wage for a position is a market reality that we don’t control. In situations where the candidate expects a salary higher than what the employer has budgeted, our recruiting team presents candidates who meet the qualifications, making the compensation requirements clear from the beginning. We do this so there are no surprises at the end and so you, the employer, know what compensation to offer a top candidate. The last thing we want is to reach the end of a long process where, frankly, we’ve both invested a lot of time and money, and then surprise you by compensation that you never expected.
To land a great candidate, your offer needs to create a situation that allows for further negotiation. Offering an amount close to the candidate’s expected salary shows that you value what she will be bringing to the table and will hopefully keep the conversation going…and in ABC’s case, it did. The compromise they suggested didn’t look exactly like what Myrna was already making. But the complete compensation package, including benefits and perks such as an improved commute and greater flexibility, did hit Myrna’s target. In the end, ABC’s negotiated offer satisfied her expectations, and a match was made.
To summarize, when you hope to make an offer your candidate can’t refuse, use the four principles this story illustrates: