One concern I often hear from recruiters is that they can’t beat out their competitors when it comes to compensation.
I recently ran a webcast on SMB (Small & Mid-size Businesses) recruiting and the concern there was even stronger.
I contend this is just a straw man – an excuse. Here’s how you can diminish the importance of compensation:
1. Don’t use compensation as a conversation stopper.
As soon as you get a candidate on the line, ask if the person is willing to discuss a potential career opportunity. When they say yes, anticipate the compensation questions and say “Great. Let’s first see if the opportunity makes career sense, and if so, we can then see if the compensation matches your requirements.” What you’ll discover is that once the person has a fuller understanding of the job and the career potential, compensation becomes just one of many factors to consider, not the primary one.
2. Slow Dance.
It takes the best candidates – those who aren’t looking and those with multiple opportunities – more time to collect all of the information necessary to make a fully-formed career decision. Recruiters who are focused on filling positions quickly tend to assume all candidates have an economic reason to accept the job. It’s not true. What is true is the need to slow down and share information, not filter each other out on short-terms factors.
3. Conduct a needs analysis, not a box-checking assessment.
When a candidate agrees to talk about a possible career move, don’t go into box-checking mode. Instead, suggest that you’d to quickly review the person’s background and then give a high-level overview of your open job. Then say that if the job appears to offer a potential career move, you’ll schedule more time to talk in more depth.
4. Create the opportunity gap.
During the first call, the recruiter’s objective is to compare the person’s current role to the open job opportunity. This is easy if you’ve prepared a performance-based job description with the hiring manager. These types of job descriptions are equivalent to the product knowledge any good sales person needs to possess. Without it, the recruiter is seen as only a gatekeeper.
The objective of the first call is to find enough information about the candidate to offer the possibility of a 30% increase consisting of some job stretch, faster growth and a modest bump in compensation. Use gathering more information to determine these factors as a reason to arrange a more detailed conversation.
5. Negotiate the job, not the compensation.
A bigger job can often offset a modest compensation increase. If your job is not big enough for the candidate, ask if the person would be open to continuing the conversation if the job offered more stretch and/or growth.
6. Get the candidate to sell you.
Before you negotiate the final offer, ask the person if he or she would want the job if it weren’t for the compensation. Then have the person tell you why. If the answer is superficial, do not hire the person. People who haven’t convinced themselves about the career opportunity inherent in the job are problems waiting to happen. These are the people who quickly become your disengaged under-performers.
There’s more to recruiting passive candidates and negotiating an offer, but it’s important to understand the differences between transactional and consultative recruiting. The former is driven by compensation, the latter by opportunity. Transactional recruiting is based on offering commodity jobs where price is the primary differentiator, while consultative recruiting is driven by growth and opportunity with price being one of a number of variables to negotiate. The objective of the first is to hire decent people quickly and avoid big mistakes, while the objective of the second is to hire the best person possible, not the best person who applies. When it comes to recruiting and hiring the best people, it’s never about the money.
If you’ve ever had an offer turned down or had a candidate say, “I have to think about it,” you made the offer too soon. You’ve probably also broken the cardinal principle that every recruiter must follow: “Never make a formal offer until it’s been 100% accepted. Test it first, test it again, and continue to test it until the candidate says yes.” Only then make the offer.
As everyone knows, candidates use offers to obtain counter-offers or negotiate other offers. This will become more common as hiring demands in the U.S. accelerate in 2015. By testing offers before you make them, you’ll be in a position to be the last company to extend the offer, minimizing the chances the candidate will renege. While you want the candidate to have reasonable time to think about the offer, you also want to know what the person is thinking about. They will only tell you this if you haven’t made the offer formal.
Start the testing process after the first interview by asking, “Based on what you now know about the job, is this something you’d be interested in pursuing seriously?” There’s more to this of course, but assuming the answer is “yes” and you’ve moved the candidate successfully through multiple interviews, let’s fast-forward to testing a final offer.
At the final offer stage, ask: “Based on what you now know about the job, is it one you’d be willing to accept if an offer was fair?” If the candidate hesitates at this phase after expressing serious interest earlier, it’s likely something better has turned up. In this case the recruiter needs to figure out what it is before extending an offer. Try to uncover the concern by saying, “It seems to me you’re a bit reluctant to move forward. This is surprising given all of the interviews and effort involved so far both on your part and others in the company. Something about the job must still be bothering you. Would you mind telling me what it is?”
You must uncover the problem. Sometimes what candidates tell you at this late stage is misleading in an attempt to disguise the real issue (better offer, doubts about the job or hiring manager, a counter-offer). To validate the concern, you can use the selling technique known as “closing upon a concern.” It goes like this, “If we could satisfactorily address that issue — which I’m not sure we can, but if we could — would you then agree to (schedule the next interview, meet with the hiring manager, take the test, start by a certain date)?”
Most people are at least willing to move forward if their biggest concern is addressed. If not, you’ll have to continue to uncover the concern to determine if you can salvage the situation. If you can, you’ll then need to negotiate the compensation. Once you have a reasonable compensation figure you need to test the candidate’s true interest in accepting an offer. One way is to ask, “I’m not sure we can get to that level, but if we could, when would you be in a position to start?”
This test question is called a secondary or indirect close. If the candidate hesitates to give you a start date, something else is of concern. The recruiter must then go back and uncover the real concern before moving forward. Once this is accomplished, you can come back to negotiating the compensation.
If compensation becomes a roadblock put it in the parking lot by asking, “Forget the compensation for a minute. Is this a job you really want? If not, we should stop right now, because no matter what the compensation is, you’ll soon be unhappy.” This technique allows you to determine if the job itself is a problem in some way or just the compensation package.
For more on this critical topic, here’s the full negotiating the offer handbook, but the key point for recruiters to remember is to test all aspects of an offer before presenting it to the candidate. This testing needs to cover everything including salary, the benefits package, vacations, training, car allowance, bonus, options, and everything else you can think of. Do not assume anything. Frequently something minor, like an early vacation or the insurance co-pay, can cause an offer to be turned down, or create unnecessary haggling.
You should never be surprised when an offer is rejected. Even better, if you test them all first as described they’ll all be accepted or you won’t make them. When in doubt remember the first rule of recruiting: never make an offer unless you’re 100% sure it will be accepted.
* image by Minh Hoang