What recruiters must know about effectively negotiating compensation during the hiring process and minimizing turnover. Would Maslow agree?
August 16, 2007
by Michelle Alarcon, Esq., MBA
The best talent comes at a higher price. Is this cliché true for people services? Is there a solid correlation between salary and competency/skills or is salary fixed by skills of the negotiating parties? What do finance recruiters have to know and what are the factors they have to consider during this phase? What is the recruiter’s role in salary negotiations?
If these sound like issues that you and your colleagues are wrestling with, then read on.
Finance and accounting recruiters and employers must adhere to the first rule in hiring: Keep focused on your goal of hiring the best and the brightest. Negotiations must not be concerned about getting your best candidate at the lowest price, but on finding a match between their needs and what your company can offer. Consider the cost of losing the “best” candidate because the salary offer turned them off; or losing them after hire because you exaggerated certain aspects of the job and compensation during negotiation.
Three Negotiation Tips
There are three key points to know during the negotiation phase:
After years of analyzing employee salaries, it still surprises me that there is little evidence correlating a worker’s salary with his or here competency and success on the job. The reason? Compensation is a very personal issue. Workers have different needs in various stages of their lives and careers. Some employees will work equally hard for less pay and vice-versa.
All’s Fair in Negotiating and Recruiting
Fair negotiation does not try to short change a potential employee by offering the lowest possible salary, especially if you sense the candidate may be desperate due to a life or career situation. Eventually, once they’re out of this temporary bind, they may leave if they believe they are not being compensated fairly. The cost of turnover is much higher for the organization. Consider the candidate’s potential value based on the experience she brings and her possible contribution to the work environment and the company’s bottom-line. Companies with an organized compensation structure have minimum and maximum pay ranges. Starting salaries typically go between the minimum and the mid-range. If this is below the salary expectation of your best candidate, highlight the benefits and negotiate some incentives package — again know your candidates well and find out what is most valuable to them.
What if you still cannot match your best candidate’s compensation requirements? Do you just let go and allow this person to work for the competition? This is where negotiation skills come in, but be very careful about this — remember, you are not selling a product that customers can return if they are not satisfied. You are selling your company in exchange for their services, which may be more detrimental if the employee is disgruntled because she accepted your offer based on some skillful negotiating tactics that overemphasized aspects of the company that are not realistic. Give a realistic job preview to avoid costly turnover. Don’t make promises of future compensation such as huge potential bonuses and salary increases that may be hard to fulfill, or exaggerate the workplace atmosphere as fun and exciting if it is not. Your company will stand a good chance that this person will leave, which is a more costly thing. So, a hard rule to accept is to let go if it seems impossible to meet the candidate’s honest requirements.
Again, salary negotiation is about assessing the worth of the candidate to the company and matching their needs with what the company can offer. It’s not about getting cheaper labor. Prudent firms that understand the high cost of turnover follow this concept seriously.
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