By Josh McAfee
It’s hard not to cringe when salary and compensation comes up in any conversation. Not only can it be a difficult topic, but understanding what is fair in the market can be hard to determine. Companies don’t want to overpay and candidates don’t want to be underpaid.
You’d think you could Google that info, but the standard sources everyone uses are already out of date by at least 6 months to a year and weighted by older data. When you go to the market, you’ll find that what people are actually making is significantly different than those websites would lead you to believe. If you make an offer based on those ranges while other companies are offering more, you’ll often lose out on good candidates.
Before we get into the WHERE, let’s talk about the WHY. What is driving these costly upward trends?
Supply chain disruptions, pandemic related restrictions, and out of control inflation have plagued companies for the last couple of years. Those alone would be enough of a challenge to derail any business growth. Trying to pay people more is often an additional burden organizations hesitate to take on… But they’re going to have to.
The pandemic taught us that there are many jobs that can be done remotely. That means companies are no longer constrained to their local markets to find the talent they need and, instead, can source employees from secondary or tertiary areas. Big name brands like Google, Apple, Microsoft, and other companies realized they could hire globally AND reduce operational costs of physical offices. Having deep pockets and a long reach, they can often offer top talent 20-50% MORE money while still paying 20-40% LESS than they would for an employee in areas like San Francisco, New York, or Chicago. They may be enjoying the savings, but unfortunately they’re also driving up salary costs for everyone.
So how do you find ACCURATE salary and compensation data? How do you know what you’re offering is competitive enough to attract the candidates you need to backfill lost positions and grow your company?
The short answer is: a good recruiter. They’re in the market. They know what candidates are getting and what your competition is offering. If you’ve already tried listing a job online and offering whatever Google says is fair pay, you may be trailing the salary trend and not attracting the quality talent you need.
The first thing I’d recommend is to stop thinking about the salary band itself and instead focus on the qualifications. What are the minimum and maximum skill sets you need for the position you’re looking to hire? Focus on interviewing people within that range. You’ll find that salary to experience levels will parallel within those groups as you move from more junior to senior ranks.
Skilled recruiters will be able to reach a larger pool of candidates. From those efforts, the recruiter will be able to collect actual numbers. This will be a better reflection of current market salary reality by providing more data to gauge the overall value of your opportunity. If you’re only interviewing 1-2 people, you’ll get a thin data set. Interviewing 5-7 or more candidates will better demonstrate trends. This approach may mean you’ll lose out on a couple of people in the process while you adjust your offering, but then you’ll know if you need to bump proposed salaries to attract who you need. Alternatively, you could consider hiring someone that’s a little greener that the company can afford and develop.
It’s also a good idea to take an honest assessment of the value of the position to your business. What we found is that sometimes clients aren’t hiring people because they feel they can’t afford or don’t want to pay significantly more than they were expecting. Try to see past the sticker shock and examine the impact on your team. Ask yourself, if this position remains unfilled for 3-5 months:
- What does not having that person in place cause?
- Are your other employees becoming flight risks due to being overburdened?
- Are your employees missing deadlines or not providing the quality your customers expect?
- Is there a significant business cost associated with that empty seat?
No one likes paying more for anything, but that is the crazy realty of salaries today. Effective recruiters will be uniquely positioned to help you craft an opportunity that will attract the talent you need, even if it may need some adjustments for budgeting. Lean on their expertise for up to date information on salaries and compensation.
Do you have positions that are in desperate need of filling? Have you lost out on potentially great hires because your opportunity isn’t competitive or exciting enough? Tired of waiting for those passive Indeed postings to bring you candidates worth hiring?
Let’s schedule some time with the Humans Doing team to solve those problems for you.
Josh McAfee is the Co-Founder and Managing Partner at Humans Doing. With over 26 years of recruiting and team-building experience, Josh has worked with startups, SMBs, and large companies to determine hiring needs, develop our recruiting strategies and processes, and connect top talent to fuel growth. In 2021, he became a Wall Street Journal and USA Today bestselling author with his book Measure Up: Mastering Your Career Search Like a Boss.
Humans Doing is an expert team of highly skilled recruiters specializing in filling critical tech and leadership positions for growing companies. Our greatest measure of success is the success of our clients and the candidates we place with them. We help people make great hiring and career decisions. Our team is ready to partner with you to find the right people for the right roles.