Offering and negotiating employment terms with potential new employes is a time fraught with risk.
Ideally it should be about creating a win/win situation for you the employer as well as the candidate you have selected to join your team. However this is not always the case.
With the war for talent as fierce as it is, the best candidates today are definitely not only looking for an increase in their base salaries.
I once made an offer to a candidate which included a $10,000 increase in her base salary. Without even thinking about it, she said, “by the time that gets taxed, and they pay me monthly, it will hardly be enough to cover the petrol it will cost me to get there“. Upon reflection that probably wasn’t too far from the truth.
From the perspective of an employer making an offer to a potential new employee, if the candidate is going to accept a job offer based purely on a higher base salary, then their existing employer is very likely going to put forward a counter offer. Then the bidding war begins and this is something you really should try to avoid.
Having a candidate decline a job offer because he or she believes that (base salary aside) the compensation plan you are offering them is not attractive enough is also a situation in which many employers are finding themselves in today’s market.
Business owners and hiring managers must put a far greater effort into formulating compensation plans that will not only ensure that the candidate realises just how serious you are about wanting them on board, but will also reinforce to the employment market that you are clearly positioning your business as a true employer of choice.
Employers should find out during the initial interview what would drive the candidate to really perform well? How would they measure their own success in the role you are talking to them about? What motivates them beyond their base salary?
Once this information is ascertained it is then possible to tailor the compensation plan around the candidate.
Incentives and Bonus Schemes
Many candidates are put off by terms such as discretionary bonus or profit sharing when salary packages are broken down or outlined in their offer letters, since for the most part the chance or likelihood of achieving these additional benefits is beyond their control. Personally they may perform outstandingly, but if the company doesn’t perform well, then a ‘discretionary bonus’ could be minimal and in some cases not awarded at all.
Candidates today would much rather be measured (and ultimately rewarded and compensated) on their own individual performance and contribution to their team as well as to the business as a whole.
Nowadays the majority of candidates (at least those really serious about finding the right next step in their career) will be totally prepared when it comes to assessing and ultimately negotiating their salary, benefits and total remuneration package.
They will have conducted their own comparative research into salary packages, and they will have a fairly accurate idea of their value for their level and profession in their market.
Tailoring the Remuneration Package
Where possible, you should tailor earning potential around an individual employee.
More than ever before candidates are not simply jumping at the first offer made available to them. So asking “what package are you on now, and what package will entice you to move?” is a question that should be asked when you first meet with a prospective new employee. That way you can start to think creatively in terms of meeting their expectations around earning potential.
Discussions around job offers, salary packages, compensation and benefit plans are a daily occurrence in today’s market. However attractive compensation plans, attractive incentive schemes and offers tailored towards both the financial as well as developmental needs of highly sought-after candidates are extremely rare.