What You Need to Know in 2017
Compensation is, let’s face it, probably the single most important tool in the recruitment toolbox. Sure, other factors such as corporate culture and career advancement opportunities play critical roles but, when all’s said and done, salary and benefits are typically the prime motivator for any single individual deciding whether to make a job change.
As a recruitment consultant, employers often look to people like me for recommendations on market competitive compensation. In today’s environment, with unemployment at 4.7% (the lowest since 2008) my advice is pretty blunt: you need to get real about compensation. Too many employers are still disconnected from reality and too many hiring managers still think they are in the buyer’s seat when negotiating compensation with a currently employed, top performing job candidate. They pursue their competition’s top performing “A” players who are typically earning top salaries and receiving annual increases way above the 2.5-3 percent average cost of living increase. Employers then attempt to save money with lowball offers below the comp the person is currently earning. And wonder why their offer is turned down!
Job candidates have the upper hand in negotiations today so do your homework on market comp for your specific roles. Most employed job candidates tell me that they are unlikely to make a lateral move for anything less than a 15-20% total comp increase. (For more on this from Indeed, link here.) Conversely, they are wary of those employers paying 50% or more above market for the role which raises questions about the history of that role and how much turnover it has had — and why.
A couple of other tips as we enter 2017:
- Evaluate your entire employment value proposition (EVP) to be sure it is competitive with the A player’s current EVP. Asking A players to commute one hour to work inside an office when they currently work remotely and go into the office only as necessary is a negative and will result in an offer turn down. Flex schedules, and work location are top negotiable items that won’t cost you money and are more easily won in the negotiation process.
- Assess the market competitiveness of your benefits programs – in particular, assess the employee contribution percentage to benefits. These have been increasing and savvy job hunters are calculating these often “hidden” costs when comparing offers. The employee contributions toward health insurance itself may not be negotiable, but be prepared to give in on something else.
- Understand the current status of your professional development programs – many companies’ professional development budgets were cut in the recession and have not been brought back. If that’s been the case at your organization and if you can’t budge on base salary, use this as a good negotiating tool. At many of my clients, professional development comes out of a separate budget. So, if candidates are asking for training and development, negotiate an amount for attendance at professional conferences or for classes to achieve their goals.
Finally, selling the concept of paying at, or above, market rate for top talent can be difficult. However, the expense of not filling a key role with a top performer can actually cost you more in the long run — in terms of turnover, lost productivity and repeat recruiting costs. To convince others of the need to “get real”, educate hiring managers and business leaders on the new reality of compensation by doing your research and getting detailed salary info, by role, by qualifications and by geography. Websites like www.salary.com, www.payscale.com, www.glassdoor.com and www.indeed.com are good starting points. For more robust, ongoing market intel on recruiting difficulty, compensation, talent supply and demand by geography – check out the Corporate Executive Boards “Talent Neuron” subscription based service.