I was recently talking with a client who wanted to make an offer to one of our candidates; I have known this guy for many years so we are always able to have very open and candid conversations about the hiring process.
After telling me the candidate was exactly what he wanted, he told me he wanted to offer her a salary level lower than we had initially discussed (including his and my discussions with the candidate). When I asked him why, he said it was because he thinks that is how much she’s worth in the market. “Fair enough” I said… “tell me about the research you’ve done to arrive at that conclusion.” “Well, I haven’t really researched it, but that’s all I want to pay”.
So his desired offer had nothing to do with the market, and was purely about a made up figure that he wanted to pay.
To help him understand the difference, I asked him what he would be if he was planning on selling his house and needed to get a realistic idea of pricing – “I would look online and see what similar houses were listed / selling for”…. and if he wanted to sell his car online, how would he set the price…..? Same process. So the question you need to ask yourself as a hiring manager is…
“Who sets the market price”
And the bad news is, it’s not you! The market ‘price’ for anything, be it a house, a stamp collection, an employee or a car is whatever someone in the market will pay for it.
Now I’m not saying it’s not OK to have a limited budget for salary that you can’t go over; but if that is the case, be realistic about it, and understand when you are below market rate. Once you acknowledge this, you can start to build a case around other benefits / reasons someone would join your company. I have seen loads of clients over 10 years miss out on quality candidates through offering ‘all the candidate was worth’, only to see them secure jobs with other companies (often competitors) who saw their value, and understood that if they wanted to secure them they had to pay what the market dictated they are worth. Even if you do manage to secure someone at below-market rate, you will have a staff member who at some point will inevitably become aware other companies would pay them more, and in the end you’ll probably lose that person.
Recruitment can be an expensive exercise (says the recruiter), so make sure you don’t get in your own way by basing your salary expectations on a number you’ve made up – do some research and make yourself competitive in the market.