systematicHR

The HR Capitalist had a post the other day about pricing candidate salaries.  But as usual, I have my own opinions.

Say it with me – the market rate for any candidate is the $$ amount they will accept.  They’ve got info about what they are worth, you’ve got info about what they are worth.  When it all comes down to it, ranges give guidance, but you can’t rely on the extremes in the offer process.  You use the range to close business.  ((Dunn, Kris, December 8, 2009.  “Say It With Me: The Market Rate for any Candidate is the $$ Amount They Will Accept with Mimimal Counters…”  Retrieved from http://www.hrcapitalist.com/.))

I’m not totally sure I agree.  Chances are, the hiring organization does not really know what the prior salary of the candidate was.  We know that many candidates lie on resumes, and since their prior salary is not usually written, salaries probably also tend to get inflated.  We also have a pretty reasonable range of salaries that our compensation departments are doing.  These global surveys are pretty standardized across a number of consultancies, and are fairly predictable.  Candidates generally know the range of pricing they are looking at, as do the hiring organization.  It’s no secret what the typical ranges are for a candidate who is experienced and has been in the market.

However, rather than the market rate being how little a candidate will accept, I think that this idea is a recession strategy.  Since we have lots of people sitting on the bench right now either having been laid off or whatever, this strategy might work in the short term.  But in the long term, I’d like to think that we’re looking at recruiting and pricing more strategically.  If we are running a successful recruiting program, we are going to be recruiting people who are already employed, and perhaps are not even looking for jobs.  These are the best candidates as we all know (even if we all know it in theory but not in practice – they are the hardest candidates to get).  When we talk about positions that are highly collaborative or require a degree of innovation capacity, then the stakes go up significantly.  It’s not the lowest price a candidate will take, but based on the idea of a growth economy and the strategy of the position being filled, I believe it’s more about what the position is worth to the organization.

I’ve had it all ways, early in my career with a WAY lowball offer (which I took since I was rather inexperienced and it was still a good offer for where I was at – I later learned that all my peers were earning at least $10k more).  I’ve had the generous offer based on my skills and experience and the fact that I was not really interested in moving jobs, and I’ve had the fair offer (when I was actually on the bench myself).

At the end of the day, we need to make sure that we are hiring people in a cost effective way.  But if we decide that low salary pricing is the only way, then we deal a bad hand if we’re looking to fill strategic positions with high caliber employees.  The best people out there know they are the best and don’t take to this strategy well – they walk away instead.  Even the average people out there know where it’s at, and lowball salaries don’t make for long term engaged employees.  Decide for yourself if that $5k is worth disengagement or missing out on the best candidates.