Candidate Money Wars – How to Win them rather than Fight Them
Too often, employers get irritated and feel exploited when candidates negotiate their worth in the candidate money wars. But it harks back to a Master-Servant sociocultural model that lost its credibility a hundred years ago. When you understand what skills and experience you need and why you need it, negotiating salary with the right candidate becomes an exercise in securing your investment, rather than fighting an outdated ideology.
The last 12 months has been an emotional and financial roller coaster ride for everyone as businesses, families and communities struggle to navigate the havoc COVID has created.
But like every crisis, there have been silver linings and opportunities for many. For us in Australia, the closed borders have noticeably changed the candidate market. For starters, women are getting opportunities that previously eluded them, and those over 45 are no longer discarded from shortlists. Migrants are finally getting to use the skills that got them a Visa to live here, rather than having to clean or drive a taxi because recruiters and hiring managers keep using the old ‘no Australian experience’ as a reason for rejecting their applications.
But something else has happened. We’re seeing salary levels that would have been unbelievable 18 months ago. A string of placements recently made by our team all had a common theme – the successful candidate securing a salary sometimes 25% higher than they would have been able to negotiate before the pandemic.
Why is this happening?
I recently wrote about how the candidate market has changed and why, but suffice to say the net result is that there’s a significantly reduced number of candidates available. Gone are the days when we might have a dozen or more applicants that meet 80% of the selection criteria. For some roles, you’re lucky to see two people who might fit the bill!
Add into this the number of candidates who are ‘staying put’ in their current roles because they have established trusting working relationships that enable huge flexibility of work, or would rather not jump ship and learn a new job in uncertain times, or who have been offered bonuses to stay, and you have a much smaller pool of candidates than we’ve been used to.
And when the candidate market shrinks, the value of skills and experience goes up. A lot, in some cases.
What does this mean for hiring managers?
More and more, candidates with strong skills and experience know their worth and have the increased confidence to stand their ground in salary negotiations.
There are a few things that hiring managers would be well advised to think through when setting a salary range as they embark on a recruitment campaign for someone with the skills and experience they need.
1. View someone’s salary as an investment not a cost
Most business owners see wages as a cost that can be manipulated. While cutting costs is an obvious way through uncertain economic times, losing people that actually drive your business forward is false economics.
2. Forget what you ‘used to pay’ as the benchmark for the new hire
Times have changed. In a competitive market like we’re seeing now, in many cases the ‘old’ salary level is not enough. Even though you think it should be.
3. Do some research on what the current market rate salary is for the role you are hiring
There are lots of great online tools that will enable you to check out what the market is paying for the role you’re needing to fill. Or jump onto the job boards and LinkedIn Jobs to see what your competitors are offering as a salary. Or ask a recruiter what the market rate is.
4. Think about what other benefits you may be in a position to offer
Money isn’t everything. Even though our culture sometimes thinks it is. For many people, other things are as, or more, important. If you get to know your candidate well throughout the interview process, you’ll have an idea what might float their boat. Things like relocation allowances, time off for study, flexible working hours, learning and development opportunities, performance bonuses are all great incentives to top up someone’s salary.
5. Offer a staggered salary opportunity linked to the completion of the probation period
Rewarding people for showing you what they can do is a very successful negotiating tool. Agree on a starting salary with a review in six months that will get them to the salary they’re looking for. It’s a win-win. You get to see what your new hire can do before paying the higher salary and they get rewarded for establishing their worth.
6. Conduct a solid ROI analysis on the role and be honest about what it is worth
Sometimes, paying a bit more to the right candidate doesn’t mean you’re ‘losing money’. If their contribution increases revenue or productivity, your investment will be a good one and you’re in front.
Understand what you need and why, and then go and get it!
Too often, employers get irritated and feel exploited when candidates negotiate their worth. But it harks back to a Master-Servant sociocultural model that lost its credibility a hundred years ago as we started to accept that employer-employee relationships were a fair exchange of skills and experience for appropriate reward.
When you understand what skills and experience you need and why you need it, negotiating salary with the right candidate becomes an exercise in securing your investment, rather than fighting an outdated ideology.
Professional recruitment and fair pricing? Yes, it‘s possible!
At Just Right People Recruitment we‘ll give you the flexibility to choose between three different pricing models. And we guarantee each one will deliver a high-quality recruitment outcome tailored to your job, your budget and your specific needs. Now, that’s fair!Learn more…