Hiring for open positions today is harder than ever. The unemployment rate is at a historic low and there are more open positions than there are job seekers, according to the Labor Department.
This shift of power creates a lot of opportunity for employees and candidates. They’re often either well-compensated and happily employed or juggling multiple career-advancing job opportunities at once.
However, that doesn’t mean it’s impossible to find and hire top employees. It means you need to change how you’ve traditionally recruited top talent. A big part of that shift comes from rethinking your compensation plan and how you present your offer to top candidates.
Below, we offer insight into how employees and candidates are behaving in today’s market and how you can make an offer they won’t be able to resist.
Tl;dr – if you are time-strapped and want a quick summary, we’ve included a simple, bulleted summary at the end of this post.
UNDERSTANDING THE EMPLOYEE PERSPECTIVE
Before you start your recruiting process, you need to understand the mindset of a top performing employee and how they’re behaving in today’s market.
Once you have this awareness, you can then be more strategic and intentional about creating a compensation plan that will attract and entice top candidates.
STRONG PERFORMERS ARE HAPPY AND BEING REWARDED
Top performing candidates are being rewarded with strong earnings, especially in revenue-generating roles like sales. For example, sales reps are continually meeting and exceeding their quotas. In turn, companies are paying out hefty bonuses and team awards based on company performance and earnings.
Employees are also happier with their employers in general. Companies are seeing success in the strong economy and employees feel secure in their position. When companies are struggling or laying off employees, for example, employees are more willing to seek out new opportunities.
EMPLOYEES AREN’T MAKING LATERAL MOVES
In the past, candidates were more willing to make a lateral move in terms of compensation and role, especially if they weren’t satisfied with their company. Today, strong employees are doing well in their current roles are less likely to make a lateral move.
If you’re matching a candidate’s current compensation, that’s not going to cut it today. Your offer has to exceed the candidate’s current compensation if you want to get their attention. Would you leave a good position with a known entity to take a risk with an unknown company for no incremental pay? Neither would top performers!
TOP CANDIDATES HAVE OPTIONS
In a candidate drought, top employees are going to be sought after by many companies at once. It’s normal for us to work with top candidates who are considering multiple job opportunities with different companies.
And not only are top employees being enticed by outside companies, but they’re also being persuaded by their current employers to stay on board. Counter-offers are becoming almost inevitable.
Companies are highly concerned about losing top performers because they know how hard it is to find replacements. They are more willing to accommodate an employee’s needs and offer incentives for them to stay.
Just know that if you have your eye on a particular candidate, you’re probably not the only one.
HOW EMPLOYERS CAN COMPETE IN THE CANDIDATE DROUGHT
We’ve discussed how top performing employees are happy, not willing to make a lateral move, and being pursued by multiple companies at once.
Even though these are some pretty big obstacles, you can still conquer them if you use the right strategies and prepare accordingly.
Find out how to adapt your compensation plan for today’s candidates and learn tips to use during the offer and negotiation stage to make sure you hire your top pick.
STAY UP-TO-DATE WITH CURRENT SALARY TRENDS
When was the last time you hired for your open position? Has it been months or years? Or maybe this is a new position you’re adding to your team and you have to start the hiring process from scratch. Compensation is changing so quickly that what was competitive a year ago might not be considered competitive today.
If it has been a while since your last hire, then you need to start researching the current salary trends in the market. Rely on salary guides and research current and upcoming salary trends in your industry as well.
Also, in the past, you could first find out how much a candidate was earning and then offer them a higher salary. But in many states today, you can no longer ask candidates what they earn. Now you have to do your research in advance if you want to ensure that you’re offering a highly competitive compensation package.
If you don’t do your research and offer a candidate less than they’re worth, you risk offending the candidate and stopping the hiring process on the spot.
BE AWARE OF IN-DEMAND INDUSTRIES AND ROLES
If you are in one of the industries that are experiencing an explosion in growth like technology or health care, or if you are trying to hire for in-demand roles like sales or IT, salaries are changing rapidly and you can’t rely on what you’ve always offered for a particular role.
If you’re in a competitive industry or recruiting for an in-demand role, you should consider turning to experts. Recruiting experts hire for these positions day in and day out and will have a pulse on what’s currently going on in the market. You can also find recruiting firms who specialize in your specific industry or role so you can find out the most relevant and up to date information.
GET CREATIVE
As we mentioned above, employees are content in their current positions. Offering a higher salary isn’t always enough to convince someone to leave their current position. Not to mention, many companies can’t afford to pay above market to lure someone away.
When you can’t offer a high salary consider other financial incentives such as profit sharing, stock options, and signing bonuses.
Also, consider the position you’re hiring for and whether you can offer bonuses for performance. In the compensation package for a sales rep, for example, you can offer guarantees against the commission and accelerators on commission earnings.
You may also need to be willing to go outside of your normal pay range on a case by case basis to get the talent that you want.
ANTICIPATE NEGOTIATIONS
Instead, you need to be flexible and open to negotiation. Don’t get too stuck in ‘pay grades’, salary ranges, and what you’ve always offered candidates for that position. Speak to the individual and see what their concerns are and what they need. And treat the counter as a starting point for discussions and see if what they’re asking makes sense for your business.
Before you even get to the offer, you should be listening throughout the process to understand the candidate’s motivating factors. Then you can complement your salary with other variables that are of interest to that specific candidate. Paying attention to these factors early on will help you craft a better offer in the first place.
Also, one of the worst things you can do when it comes to negotiation is to intentionally low ball a candidate. Many employers like to offer a low salary at first and have the candidate negotiate up from there. However, this can put a bad taste in candidate’s mouth and may lead to them declining your offer outright.
PLAN FOR A COUNTER-OFFER
As we mentioned above, in a candidate drought, a counter-offer is almost inevitable if you’re looking to hire a top candidate.
If you want your offer stage to go more smoothly, then you need to get ahead of a potential counteroffer. As you start the interview process, make sure to work in a candidate’s current employer into the discussion. Great probing questions to ask are:
Where do you stand with your current employer?
How do you expect your current employer to respond if you accept this position?
How will you respond to a counter-offer?
Once you get the answers to these questions, probe further and ask the candidate to expand on their motivations for leaving or staying with their current employer. Knowing their motivations can help you when putting together the compensation package.
For example, if a candidate has a cap on commission at their current company, you can offer a commission plan with no cap.
MAKE A TRANSITION PLAN
Finally, once a candidate accepts the position, you need to have a transition plan if you want to retain them.
Many compensation plans include performance bonuses and opportunities, but it will often take the new employee some time to start reaching those goals. So how do you keep your new employees happy in the meantime? Maybe you offer a sign on bonus or break up the performance bonuses into more attainable goals for the first year.
You need to think about what makes sense for your business and for that specific employee based on their motivations.
In Review
The Employee Mind Set:
- Strong performers are happy and well-compensated
- Employees aren’t willing to change positions for a lateral move
- Top employees are often being pursued by outside companies and their current companies are doing everything they can to retain them
What You Can Do:
- Stay up to date with current salary trends for your industry and roles
- Find other ways to entice top employees outside of higher pay
- Don’t be caught off guard by negotiations and counter-offers – have a plan
- Increase retention with a transition plan
There’s no denying we are in a candidate drought and employees are behaving differently knowing they have more options.
One way you increase your chances of getting hiring top candidates is to rethink your approach to compensation and salary negotiations.
As you start to craft your own compensation strategy, think about answering this question – what would it take for an employee to leave their current company? Then use the tips above to help fill in the pieces.
What would it take for you to leave your current company?
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