The Psychology of Recruitment
Recruitment is mostly human psychology and a few numbers.
The numerical part is the easy one. Defined simply, companies that deviate far from the market benchmark are unlikely to experience much success unless there is a valid and compelling reason.
When companies try to undercut1 either out of known intention or ignorance, this is a self-defeating approach with limited success.
Rationality dictates these unions don't go well nor long for the hiring company as soon as the salary-value gap is picked up by another honorable (and wiser) competitor.
When it comes to salary, my advice is both parties should know their numbers from market research and not from emotions.
Apart from the right compensation, the other X-factor for successful recruitment is the Audacity to Hire.
It is widely understood that recruiting forms part of the key performance metrics designed for the hiring manager.
The quality of hires affects their year end bottom line.
It is thus not uncommon for hiring managers to feel the burden of recruiting and this fear grows exponentially with their level of seniority because the stakes became higher.
Hiring freezes out of fear.
The typical scenario...
Company A had been laying off employees because projects didn't deliver and the oft used reason is sub-par performance. One by one, they receive their pink slips.
The company morale dips and worst of all, when a company starts to accept employee performance as the singular core issue repeatedly, they develop a habit of relying on this reason.
This is not to suggest sub par performance couldn't be the reason but it is often not the overarching reason in business performance. What about the lack of effective mentoring and coaching? I will explain this in a separate article and why companies don't like this reason.
Gradually, this translates into a tangible fear of hiring. Companies became extremely picky with candidates because they do not want to commit mistakes by onboarding wrong people. The depression point is strongly felt when a company rejected all 9 candidates because each has a gap somehow.
This not-unheard-of real story was from a frustrated industry peer. He was about to go ballistic.
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We had a phone call and I suggested never sending that many candidates in one go. In fact, don't send any after the first 2 had been rejected without understanding the clear reason(s). Sometimes, the company doesn't know either.
The 3rd pillar is recruiting with a long term vision to groom the hires.
Employee turnover is costly and basic explicit costs ranges from 4.8 to 5.2 months of salary. When you take into account the cost of training and administration, the costs spike up to 6 to 8 months to replace one lost sheep.
Most companies do not have proper L&D and when even when they have, they are not doing much to mentor and coach their employees for long term mutual benefits. This comes from HR peers who candidly shared their woes.
The reason is because such L&D skills are not born with promotion. They require effort to learn and to hone and with a rapidly evolving landscape, they struggle with procrastination because the institutional imperative hasn't been set.
Just like stocks, frequent buys (hire) and sells (fire) result in trading costs (turnover) that eat into the profits.
In short, if the company can keep and groom their fairly valued employees over long term, they reap the compounded benefits from holding them. In HR, you hold them close by creating initiatives that support their growth which further justify their higher salaries. This way, they can't be easily poached and you can even implement inverse poaching as competitors catch wind of your leading practices.
Let's wrap. In my practice, there are 3 pillars for effective recruiting:
Companies that practice these achieve more fulfilling hires that make the business stronger.
P.S. I run TalentOmni , and my overarching goal is working with like-minded people who exercise rigor to drive their businesses and generate long term shareholder value. I'm happy to have a chat.
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1Undercuts sometimes happen egregiously at the offer stage, making it extremely frustrating for the candidate who is transparent with salary details.