Hiring Failures are Your Fault: Your Comp Package is Stuck in the Past!
Ken Schmitt
CEO & Founder | Board Member | Private Equity Executive Search | Author & Speaker | Podcast Host | Sales, Marketing, Operations, C-Suite & Board Leadership Recruiting | Succession Planning | Human Capital Management
Hey, Subscribers!
Many companies struggle to attract top talent in today’s fiercely competitive job market. While some hiring managers point to a limited talent pool or a lack of qualified candidates as the root cause, the truth is often much closer to home. The real obstacle isn’t external—it’s internal. If you’re finding it difficult to secure the best candidates, it’s time to take a hard look at one of the most critical aspects of your hiring strategy: your compensation package.
Are You the Roadblock to Your Own Success?
Many organizations are operating with outdated compensation practices that no longer align with the expectations of today’s top talent. Competitive salaries, comprehensive benefits, and flexibility are no longer perks—they are necessities. The talent pool is full of highly qualified individuals, but if your compensation package doesn’t meet market standards, those candidates will quickly move on to other opportunities.
Common compensation package mistakes
Intentionally Lowballing Candidates Offering a salary significantly lower than market value as an opening bid is a quick way to alienate top candidates. While it may seem like a good way to cut costs, it often backfires. Candidates recognize their worth and will view a low offer as a red flag about your company’s culture or long-term investment in its people.
Top talent doesn’t just want a paycheck—they want to feel valued. A low offer suggests the opposite, and even if negotiations raise the salary later, the initial damage may be irreversible.
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Ignoring the Importance of Good Benefits Benefits is a key component of any workforce compensation package. Health insurance, retirement plans, paid time off, flexible work arrangements, and wellness programs are all non-negotiable for many professionals, particularly in a post-pandemic world. Candidates are looking for companies that value their well-being as much as their work output.
Failing to offer competitive benefits or cutting corners on health insurance or retirement contributions can make even a high salary less attractive.
Refusing to Negotiate Some hiring managers treat their initial offer as final and refuse to budge during negotiations. This rigid approach can result in losing top candidates who expect some flexibility, especially if they are in high demand.
Negotiation isn’t just about salary—it’s about work hours, remote work options, and professional development opportunities. Hiring managers unwilling to have these discussions miss the chance to tailor the offer to the candidate’s unique needs and priorities.
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Focusing Only on Short-Term Costs When companies fixate solely on reducing initial compensation costs, they fail to consider long-term investment. Offering a competitive salary and benefits may cost more upfront, but it can lead to better employee retention, higher productivity, and a more engaged workforce. In the long run, paying fairly for top talent is far more cost-effective than the revolving door of hiring and re-hiring.
So, how can hiring managers move beyond these outdated practices and attract the top talent they’re looking for?
Best Practices for Crafting a Modern Compensation Package
Research Market Trends Regularly The job market changes constantly, and what was considered a competitive salary or benefits package five years ago may not cut it today. Hiring managers should consistently research salary benchmarks and benefits trends within their industry and region to ensure they offer compensation that matches or exceeds the market.
Emphasize Total Compensation, Not Just Salary While salary is a major factor, it’s not the only one. Highlight the full value of your compensation package, including benefits, bonuses, retirement contributions, wellness programs, and professional development opportunities. Candidates prioritize work-life balance, flexibility, and growth potential over a slightly higher paycheck.
Be Transparent from the Start Transparency in the hiring process is key. Clearly communicate salary ranges, benefits, and potential for growth early in the conversation. This helps manage candidate expectations and creates trust. If a candidate feels misled about the compensation package, it can lead to dissatisfaction down the road.
Show Flexibility Every candidate is different. Some may prioritize salary, while others focus on remote work opportunities, vacation time, or learning and development. Be open to discussing different components of the offer, and be willing to tailor the package to the candidate’s needs. A little flexibility can make a big difference in landing top talent.
Invest in Long-Term Growth Top candidates want more than just a paycheck; they want opportunities to grow. Ensure your compensation package reflects this by offering professional development, mentorship programs, and clear paths for advancement. Employees who feel they have room to grow will be more engaged and less likely to seek opportunities elsewhere.
Have you passed on an opportunity because of a pre-historic comp package?
Cheers,
Ken
Co-founder at nobrainer universe | Forward looking data ??????
2 个月Great points, Ken! It’s crucial for companies to focus on total compensation and flexibility, as candidates value different things. Behavioral economics shows us that people don’t always make decisions based purely on salary—intangibles like flexibility, remote work, and professional development often carry more weight. By understanding these intrinsic motivators, companies can and should craft compensation packages that meet deeper psychological needs. It’s time businesses realize that investing in competitive packages isn’t just a short-term cost, it’s a long-term strategy for retention and success, grounded in a deeper understanding of human behavior.
Wharton Instructor, Executive and Communication Advisor/ Keynote Speaker/ Support Executives, Leaders, & their teams to uplevel communication and performance— to a level even higher than they thought possible
2 个月Ken- So well-said. It really comes down to having a long-term vision for the company and it's employees. This long-term vision needs to include KPIs regarding turnover rate and employee happiness. The relationship with a company begins with the interview and if an employee does not feel valued then, it is a needless gap that needs to be overcome (and often may not be.) What to have employees who are committed, talented and productive, treat them well from the very beginning.
As usual, great advice on how to consider hiring Ken! The talent pool for great people is especially tight these days. Love your points about negotiation!
Co-Founder and Partner, Bottomline Marketing; Aligning Marketing Strategy With Business Strategy to Drive Profitable Growth
2 个月Excellent points, Ken! It's also important to try to match what your company offers as an "employer brand" as it relates to it's comp package with the types of employees you're trying to attract. For example, if you're a large stable company, with at least "parity" salaries, a solid annual bonus and equity programs, healthcare and family leave programs, you're likely going to attract a very different type of employee vs. a small start-up that has "ok" salaries, with tremendous upside with equity and bonuses. In the first, you're likely to attract a bit older employees, with families who are looking for stability and growth. The latter might attract younger "risk takers" who are looking for a fast-paced, maybe even chaotic environment with significant upside. Neither scenario is right or wrong, but it's important to clearly align your comp package with your employer brand and what you can truly offer prospective employees.
President & Chief Research Strategist at Q2 Insights | Expert in Advanced Research Methodologies & Strategic Brand Insights
2 个月Great article! I totally agree that beyond a competitive salary and good benefits, potential employees are seeking flexibility including paid and even unpaid time off, bonuses, flexible work hours, the ability to work remotely, etc. A clear advancement path within the company is important to most, but not everyone. Negotiation of the optimal package seems critical as one size does not fit all.