Lowballing – A Dangerous Game That Costs You More Than You Think

As a recruiter, I’ve seen it all: the good, the bad, and the downright unethical. But there’s one practice that never fails to infuriate me, and that’s the tendency of companies to lowball candidates based on their previous salaries. Let’s get one thing straight—what someone earned in their last role has absolutely no relevance to what they should be paid in the role you’re offering. Yet, time and again, I see companies using this as a way to shave a few pounds off the salary they’re willing to offer. The result? A retention problem waiting to happen.

The False Economy of Lowballing

Let’s set the scene. You have a role that you’ve valued at ￡90,000. After a rigorous search, you find the perfect candidate. They tick every box, exceed every expectation. But there’s a catch—they were earning ￡60,000 in their previous role. Instead of offering them the ￡90,000 you’ve budgeted for, you decide to offer ￡70,000, reasoning that they’ll be thrilled with a ￡10,000 increase. This is where the trouble begins.

The truth is, when you offer less than the market value, you’re not saving money—you’re creating a problem. The candidate might accept the offer, but they’ll likely feel undervalued from day one. They know they’re worth more, and they’ll be acutely aware that you had the budget to pay them fairly but chose not to. This breeds resentment, and it won’t be long before they’re looking elsewhere, tempted away by a recruiter like me who recognises their true worth.

A study by the Chartered Institute of Personnel and Development (CIPD) found that low pay is one of the top reasons employees leave their jobs, with 24% of workers citing it as a key factor in their decision to move on. Add to that the Hay Group research, which shows it costs companies between 6 to 9 months of an employee's salary to replace them, and you start to see the false economy of lowballing.

The Ethical Imperative

As a recruiter known for my ethics, I go all to try and refuse to play this game. When a company asks me for a candidate’s previous salary, I'll do everything I can to not answer.

Why? Because it’s irrelevant. The value of the role is determined by the market, and that’s what should guide the offer. If a role is worth ￡90,000, then that’s what you should offer, regardless of what the candidate was earning before. Anything less is not only unethical but also disrespectful to the candidate’s skills, experience, and the value they bring to your organisation.

This approach isn’t just about fairness—it’s about good business. According to a Glassdoor study, companies that are transparent and fair in their pay practices have 30% lower employee turnover than those that aren’t. Fair pay isn’t just the right thing to do; it’s the smart thing to do.

Retention: The Real Cost of Underpaying

One of the most significant issues with lowballing candidates is the impact it has on retention. Employees who feel undervalued are more likely to leave—plain and simple. The CIPD’s 2019 UK Working Lives Survey found that 28% of employees who felt their pay was unfair were actively looking for a new job, compared to just 13% of those who felt their pay was fair.

This isn’t just about losing talent—it’s about the cost of replacing them. As mentioned earlier, it can cost up to 9 months of an employee’s salary to replace them, not to mention the loss of productivity, the impact on team morale, and the potential loss of clients or business. When you factor in these costs, the savings you thought you were making by offering less quickly evaporate.

The Candidate’s Perspective

Now, let’s take a moment to consider the candidate’s perspective. Imagine being in their shoes. You’ve been through the rigorous interview process, you’ve proven your worth, and you’ve been offered the job. But the salary offer is lower than you know the role is worth. How would you feel? Undervalued? Resentful? Less motivated?

This is a common experience for many candidates. They might accept the offer because they need the job, but they won’t forget that you didn’t value them enough to offer a fair salary. And when a recruiter like me comes along with a role that pays what they’re worth, you can bet they’ll be tempted to jump ship.

The Solution: Pay What the Role is Worth

The solution to this problem is simple: pay what the role is worth. If you’ve determined that a role is worth ￡90,000, then that’s what you should offer, regardless of the candidate’s previous salary. This not only ensures that you’re paying fairly, but it also helps to attract and retain top talent.

According to PwC’s UK Pay Survey, organisations that adopt transparent and fair pay practices see higher levels of employee engagement, lower turnover rates, and a stronger employer brand. When you pay fairly, you’re not just investing in your employees—you’re investing in the long-term success of your organisation.

The Role of Recruiters

As recruiters, we have a responsibility to advocate for fair pay practices. It’s our job to ensure that candidates are offered salaries that reflect the value of the role, not their previous pay. This means refusing to disclose candidates’ previous salaries and pushing back when companies try to lowball. And I need more recruiters to help make this happen.

We also need to educate our clients about the dangers of lowballing. It’s not just about the immediate cost savings—it’s about the long-term impact on retention, employee engagement, and your reputation as an employer. By offering fair salaries, you’re not just doing the right thing—you’re setting yourself up for success.

In today’s competitive job market, attracting and retaining top talent is more challenging than ever. Companies that continue to lowball candidates based on their previous salaries are playing a dangerous game. Not only are they risking retention issues and decreased morale, but they’re also perpetuating pay inequity and hindering diversity and inclusion efforts.

It’s time for a change. Let’s stop focusing on what candidates earned in their previous roles and start paying them what they’re worth. The benefits are clear: higher retention rates, a more engaged workforce, and a stronger, more inclusive organisation. So, the next time you’re tempted to offer less, remember—fair pay isn’t just good ethics; it’s good business.

As recruiters and employers, we have the power to drive change. Let’s use it wisely.

This is the ethos I bring to my work every day, and it’s why I’ll always advocate for what’s right, even if it means challenging the status quo. Because at the end of the day, we all want the same thing: a workforce that’s motivated, engaged, and fairly compensated for the value they bring. And that starts with offering what the role is worth—no more, no less.