Creating a compensation package is the ultimate balancing act. You want to compensate your employees fairly while also considering affordability. Your package will likely provide earning opportunities that are market-based and reward results, along with excellent benefits to employees all while guaranteeing programs that make financial sense to your organization in the long run. However, that does not always mean that your compensation package will align with a candidate’s desired salary.
If your organization doesn’t expect and prepare for a possible misalignment, you’ll need to instead prepare for some challenging salary discussions especially as job switchers are more likely to get a raise above inflation. Our look into labor trends reveals that pay rates are becoming more competitive, which means compensation packages need to be managed carefully to boost performance — otherwise, organizations can face severe consequences, including the departure of essential personnel, decreased motivation, misalignment of objectives, and diminished returns for shareholders.
So, how exactly are companies expected to navigate this gap? In this blog, we will overview how a reputable recruitment firm with experience in executive search services can help to align compensation packages and desired salaries to attract and retain top talent.
A Lower Than Standard Compensation Package
To delve into this topic, we will explore an anecdotal scenario to help reinforce the overarching themes and takeaways. Much like many of our clients, a well-established and widely recognized organization was growing and needed mid to senior-level talent. The organization reached out to us for assistance in the search and discovery, we suspected that the compensation package they were offering was slightly lower than industry standards.
That created some concern as we embarked on their search. When this happens, our approach to remedying this is to carefully detail their search criteria, employee value proposition, and opportunity. This means getting specific on the desired experience level, sophistication of the role, and geographic boundaries for the search.
Our efforts quickly resulted in finding an ideal candidate that matched their pre-set criteria except for one. The candidate was already within the salary range being offered and was asking for a healthy increase in compensation to make a career move. When we widened the scope, we also found that other candidates were also stretching the limits of the targeted salary range.
We brought this information to the client very early in the process, at the beginning of the search. We also shared labor market insights in real-time to make immediate adjustments to the search strategy before wasting time. We hoped that with data to help inform the decision, the client could be flexible in what they would be willing to offer the right candidate.
This early conversation uncovered an internal challenge the organization was facing. Meeting the candidate’s salary requirements would have placed them at a higher compensation level than the manager of this role, which could cause pay compression. This meant increasing the initial compensation for this role wasn’t an option. Likewise, increasing the salaries of every employee to create parody also wasn’t a viable option for obvious business sustainability reasons.
Reassessing Your Compensation Package
Discovering this challenge might cause some recruitment firms to push this search aside with a lower-caliber candidate, which is an unfortunate problem in the recruiting industry. However, we continued as a dedicated resource to our clients without pausing or delaying our efforts to avoid lengthening the duration of the search.
Instead, our first solution was to backtrack just enough to clarify some of the information gathered during the client onboarding process. This meant reviewing the level of experience, knowledge, education, personality, and even geographic location to see where we could adjust our search strategies. The intent was to re-establish the benchmark metrics and then the search strategy to better align with the projected offer.
Unfortunately, the client was steadfast in the level of talent they needed for this role and in what they were able to offer as compensation. So, we offered them honest advice and feedback. This search was going to be more challenging and would require more time. The leadership of this organization understood the situation.
Our next approach was to examine our biases and early conclusions about prospective candidates we had initially excluded as viable options solely based on compensation. We would leave any decision about interviewing candidates who met their search criteria to them with full disclosure about their current salary and requirements. Our role is to find our clients their perfect-fit matches and to counsel them through their hiring process, not make final hiring decisions for them.
However, we also knew there was one more thing we could do to help the situation, and that was to take a wider look at what they had to offer their employees. Beyond a base salary, what other incentives did this organization offer that allowed them to retain the top talent they already had? This was the eureka moment.
While the base salary this organization offered was below industry standards, they also offered employees a robust bonus plan, profit sharing, generous PTO, flexible hybrid work options, company-paid health coverage, defined career growth plans, and a fully transparent, thriving company culture.
They hired the candidate we sourced early in the process. The base salary was essentially a lateral move from their prior role but didn’t offer the additional considerations and monetary incentives our client did. Both the client and candidate are thrilled with their decisions.
Aligning Compensation Packages and Desired Salary
This client’s search process ended in success, despite their compensation package not matching the candidate’s desired salary. If your organization finds itself in a similar position, here are several recommendations on how to better align the two to attract and retain your perfect-fit hire.
- Be realistic in your search criteria. The more experience, education, and knowledge you require, the more compensation candidates will require. Define in detail your search criteria to avoid the consequences of falling out of scope and creating an ineffective and inefficient search process.
- Learn, consider, and adapt. The labor market is constantly changing. So what was competitive even last year may not be attractive to candidates this year. If increasing compensation isn’t an option for you, review the requirements you have for your ideal candidate and make adjustments there.
- Take feedback seriously. Your recruitment firm is immersed in the labor market and talking to candidates and other hiring organizations daily. Listen to the insight and real-time information they are sharing with you.
- Develop a compelling and honest employee value proposition. Even a highly-competitive salary isn’t always enough to persuade candidates to consider a career move. Know what else you have to offer beyond compensation and make sure you let them aware of everything you have to offer.
- Other incentives should be a value add. The smaller the gap between your compensation package and a candidate's desired salary, the easier it is to equate other incentives in financial terms that are meaningful and valuable.
- Partner with the right recruitment firm. They should act as true consultants in your effort to find and hire the right talent for your needs. This means being honest about what they are discovering, offering sound advice, setting realistic expectations, and remaining committed to your goals even if a search is more challenging.
Partnering with a reputable recruitment firm with experience in executive search services, like AEBetancourt, can help clients to navigate the gap between a hiring company’s compensation package and a candidate’s desired salary. However, this partnership can go far beyond that, ensuring that clients understand far more than expected of the recruitment and hiring process. The right firm will provide strategic, organizational, and financial benefits to its clients ranging from direct competitive advantages, avoiding common pitfalls and missteps in hiring, providing insight and counsel on the onboarding and hiring process, and lowering the cost of open positions.
Much like hiring the right person, hiring the right recruitment firm is a process that can have crucial implications on the trajectory of your business objectives. Take a look at our Complete Guide to Working with a Recruitment Firm to review some of the basics of recruitment firms, the different types, common complaints, and what recruitment guarantees, and finally, tips on how to evaluate the services you might receive and what you should expect.
