The Inequity of It All

I remember when I first joined Rotary years ago, one of my favorite things was their motto which began, “Is it fair to all concerned”.?I think about this every time I’m working with a client to hire a candidate as it helps us to be fair in the negotiation process.?

We all know it is a crazy time in the search business (it’s like buying a house right now).?Everyone is hiring, so of course we could not be busier!?Admittedly, we still have the same challenges everyone does in finding just that right person, but because it’s our full-time business, we have been successful in finding and placing a lot of great talent.

Here in lies the challenge.?It is truly a candidate driven market right now and candidates rightfully know it.?Just a short time ago, it was a client driven market.?Pay inequity has truly been our number one challenge in 2021.?Let me explain.

We craft a shortlist of outstanding candidates after weeks of searching. We know their compensation currently, but also understand they are a passive candidate, meaning they are not in an active job search, but they’re intrigued.?We present the shortlist, interviews commence and a finalist is chosen.?This is where it starts to get complex. The candidate knows that new hires are receiving a much larger bump in pay than normal from market intel, much like houses are going for way over the asking price.?The company makes their offer, and it is in alignment with the internal pay equity scale for the firm. The candidate is disappointed at the smaller than expected increase and negotiations begin.

You would think as a search firm owner this would be of great benefit because the fee will increase.?This could not be further from the truth!?ERG becomes the middleman in order to create the perfect win for both parties. On the client side – we have a true understanding of pay equity and the perspective that the market, not all that long ago, was not nearly as crazy compensation wise.?We also understand two big factors as it relates to the candidate – one, if you won’t pay them a large increase, your competitors will.?Secondly, unless the offer has something significant to it, we just helped the candidate get a raise from his or her current company in the form of a counteroffer.

It all seems overwhelming, so let’s unpack it a bit more.?There’s a plan that we have utilized to be successful in each of these challenges, it just requires more effort.

The Candidate Interview.?While it is critical to understand the technical competencies of each candidate and know they can do the job, the art of the “experiential interview” is becoming increasingly important in getting candidates to truly WANT what you have to offer. This is not the tangible salary, benefits, etc. but how your company’s purpose aligns with the values of the candidate.?Making the interview an “experience” helps to create longing and a desire on the candidate’s part to want to belong and become a part of what your organization stands for.?Demonstrations on culture – involving teammates can be a great start to get candidates excited about the company and role without the compensation conversation. It is a lot easier to close a candidate successfully if they truly liked what they heard and want the job.

The Offer.?Clients, trust me, I want the offer to be as realistic as you do.?We do provide the candidate’s yes number to our clients (and we do discuss with the candidate right up front if they are being unrealistic). While there certainly are bad recruiters out there that will inflate the numbers for the wrong reasons, we would like nothing more than to please our clients by getting a yes to a realistic offer – the best way to create repeat business!?However, I have had several clients lately that have offered the candidate less than they are earning, with the expectation that somehow it’s ok for the candidate to take a step back.?Sign-on bonus or not, I have yet to find a single person in a candidate-driven market willing to take less in a base salary.?Think about it – in this market would you sell your home for less than you listed it at??Exactly.

The Sign-On Bonus. They are absolutely one of the tools to keep salaries within reasonable pay equity of your internal team. It works a lot better before mid-year than the latter part, simply because sign-on bonuses end up going toward year-end bonuses that would be lost by leaving toward the end of the calendar year.?While potentially effective, it is not a given that this will turn the tide.?Sometimes the candidate is just making too much, but one piece of advice I will share is this: focus on the base salary – it’s the thing that is a guarantee, and it is how everyone looks at how they are compensated.?Sometimes unconsciously, candidates also interpret salary as how they are valued or how much they are wanted at the client’s organization. Some sort of increase is expected – no matter the other benefits involved.

The Counteroffer. This is one of the biggest advantages as it relates to working with a seasoned search firm.?We address this on EVERY call.?And we have data to support the fact that it is a really bad decision.?In 25 years of search, I have of course had candidates accept counteroffers.?What I can share with the candidate is this… of all those people who accepted the counteroffer – only a handful made it more than six months and only ONE was still at the company only a year later!?Counteroffers are to protect the organization as they retool what just happened.?Over time, the issues and problems that made the candidate look in the first place just magnify over time and what happens??Either the candidate eventually leaves on their own, or the company gets frustrated because the employee has become disgruntled by the lack of change. Either way – it’s not a good situation. By sharing the data and doing it almost on a daily basis – we win way more than we lose.?But again, we do still lose some, who call us back several months later when the role has been filled.??

Sounds easier to not hire,?I know! Trust me when I tell you this.?Anyone who has been in search a long time has proven that they are not in the “build the fee” game – they would have been weeded out years ago.?We genuinely care for our clients as well as the candidates and want the perfect match. We will provide guidance, but it’s your choice to accept that guidance or not.?Remember, we are all in this one together.?????

Let us know if there is anything ERG can do when it comes to your executive hiring needs. Email me anytime at [email protected] or give the office a call at 920.996.9700!???