September 23, 2010

Why you should offer job applicants more money

Filed under: For Managers, Hiring, Recruiting, Success at Work

In the last post, The Ethics of Juggling Job Offers, we talked about accepting a job offer, then rescinding the acceptance if a better deal comes along shortly thereafter (or even before you start the first job). The discussion was from the candidate side.

It begs the question, What can an employer do to avoid losing a new hire?

A company will sometimes work too hard to keep the salary offer as low as possible, virtually challenging the candidate to accept it. If the candidate gives up on negotiating a better deal and accepts the offer, the company has instantly set itself up for a quick resignation if the candidate can find a better deal elsewhere.

That’s why I advise my corporate clients to do what company presidents like to insist that their employees do for their customers: “Don’t just satisfy the customer. Delight the customer!”

Why not delight the candidate?

What does that mean?

Make the job offer so attractive; present it with such enthusiasm; and seduce the candidate with such affection that even if a slightly better offer comes along, the entire package is just too good for the candidate to pass up.

For example, if you’ve set the salary range on the job at $100k-$110k, and the candidate asks for $110k and is actually worth it, what will you do? Odds are pretty good that you’re going to offer $100k or $105k because HR teaches managers to avoid offers at the top of the range, or even offers that meet the candidate’s request. “Let the new hire have something to work for!”

I’ve got another take on this. Offer that good candidate $112k. Yep — offer a bit more than the top of your range. View that extra $2k as insurance or, if you’re really smart, view it as an investment. $2k isn’t much. But it’s not just the money. It’s the sentiment. Yah, the sentiment. Sentiments count. Add some good sentiment to that offer. It will pay off later.

And don’t let the HR office deliver the offer by phone or by mail. The hiring manager should call the candidate to make the offer and, if possible, invite the candidate into the office and deliver the offer in person. Face to face. (You know — just like when you asked the candidate to take a day off from work and come to your office to  interview.) Make it personal. “We’ve decided we’d like you to be part of our team. I’d like to discuss it with you in person. Could you please stop by?” When it’s time to pesent the offer, do it like this:

“You know what? You asked for $110k, the top of our range. Well, I’d really like you on my team. We thought about this. And we want to demonstrate how much we want you. Our budget is tight, but I’d like to offer you a bit more to show you how important we think you’ll be to our success. You requested $110k, but I’d like to offer you $112k to come work with us. The extra $2,000 is our way of saying we really mean it.”

Companies rarely do something like this. Rather, the offer is usually  a cold letter or call from HR, with the subtle message, “Take it or leave it.”

An employer who loses a new hire quickly to a better offer should stop and ask, “What did we do to make this new hire want to work here, more than anywhere else?”

An employer should ask, “Did we beat the applicant up and make her disclose her salary history to us? Did we  limit her ability to negotiate a good deal? Did we negotiate as if we don’t believe this new hire will return the extra money we pay her in extra productivity? Did we demonstrate our respect?”

In other words, did you show the candidate how you’d treat her once she was on board? Or did you give her reasons to keep looking elsewhere?

We’ve already discussed the ethics of job candidates juggling job offers. Now this is about employers tossing a good job candidate an extra treat because while you can’t buy loyalty, you certainly can signal that a good start to a working relationship is worth something to your company.

If your company isn’t smart enough to spend an extra two thousand bucks to gain an extra four thousand bucks in added productivity from a delighted employee, then your company probably isn’t worth working for.

.

18 Comments on “Why you should offer job applicants more money”
By Lucille
September 23, 2010 at 4:03 pm

I agree. But I’d like to add the reason that an employer would offer slightly more is because, (in my experience) this is the only salary you are going to get at this company. Most of the companies I have worked for (for years and done outstanding work for) do not give raises or promotions.

By A.
September 23, 2010 at 8:40 pm

I’m not a fan of doing it in person. Once the offer is ready to be made, it should be made right away, not sit for a few days or more until people can make time in their schedules for an in-person meeting. (For people with busy schedules, and that includes candidates, it can be hard to drop everything and appear in person within a day.)

By Brooke Allen
September 24, 2010 at 8:03 am

As an employer, I don’t negotiate salary and this is why:

My goal is to be the best employer I can be, and I look for similar people to work for. And by “work for” I mean that, just as my employees work for the customers, I work to support my employees. (In my particular current situation, we have only one customer, the shareholders of the firm we all work for.)

There are two kinds of people I hire:

1) People who represent opportunity I hadn’t thought of before. They need to have a plan, and their pay needs to be part of their plan, just like their other costs. I don’t negotiate their salary – but if they keep too much for themselves, that alone may make it unwise to accept their proposal.

2) People who fill a need I’ve identified and who will work to fulfill my agenda. I determine the most I can afford, and that’s that.

Rather than say I want to hire someone between $X and $Y, I try to see who is the best person I can hire for $Y. I don’t need to see prior salary history; it is irrelevant, just as if I buy a stock from you in the marketplace it should not matter to either of us what you paid for it.

What I need to see is your authentic self, and I need to know that you see my authentic self. Why? Because, who else do we plan on being after we start working together?

Authenticity requires honesty, and that is why I am not a fan of seduction, which my dictionary defines as: “enticing someone astray from right behavior.”

To say, “The most I can pay is $X” and then later offer more is to be dishonest, and that does not engender trust. If I am willing to pay $Y, then I won’t hire someone unless they are worth considerably more than $Y (I am not running a charity here). The fact that I might be able to negotiate someone from $Y down to $X is irrelevant; I have no problem with that extra value ($Y-$X) going to them – after all, they are the ones who have put the effort into being valuable.

For things to work out, we also need to trust each other. After full disclosure of the potentials, prospects, and pitfalls of the job, then I trust my candidates to decide for themselves if what I am offering is fair and meets or exceeds their needs.

This process takes time and effort, but not nearly as much as hiring the wrong person under the wrong terms.

By Erika
September 24, 2010 at 9:18 am

I agree with Nick’s advice.

Brooke, I think you may want to rethink never negotiating salary. Most people in this culture expect some negotiation. I understand what you have written, but I think you should reconsider Nick’s reasoning and be a little more flexible. Most people look for a reasonable amount of flexibility from employers, and not just about money.

By Brooke Allen
September 24, 2010 at 10:43 am

Erika:

I have already given more than a decade’s thought into the question of negotiating, but perhaps I should rethink this.

To be clear, what I’m saying is that I always offer the most I can possibly offer. If you want me to negotiate, it would only be to save my employer money, not for the benefit of my employees.

People who expect negotiation, expect me to start out low balling, and they work up and I work down. I hate playing this game and so do they.

So, what exactly do you want me to rethink? Never have an upper limit on how much I can offer? Don’t tell people what that is? Try to hire people below that upper limit? Have people compete for a job by offering to work for less than the person I’d pay top dollar to?

I have had jobs in the past where I’ve been paid less than coworkers, not because I didn’t do as good a job, but because I wasn’t as good a negotiator. I have never hired anyone where negotiating skills are among the job requirements, so I choose to be fair instead, and pay the most that I can, based on what I actually need them to do.

Once I express my approach to my candidates, I have never had anyone object and insist that I negotiate. I bought a Saturn once, and even though many people expect to negotiate the price of a car, most people hate the process. Saturn’s no-negotiation approach was just one of the many things I liked about them.

I agree with the following comments of yours:

Offering flexibility: For example, while you must take 2 weeks vacation, I’m happy if you take as much as 6. But I don’t see how always offering to pay the most I possibly can is being inflexible.

Not trashing people: In the example I gave, I would not and I did not.
An excellent book that addresses this issue is: Ethics for the Real World by Howard and Korver. They would argue that a strong ethical code, and a commitment to fair play, will show you that, often what appears like an ethical dilemma is an invitation to strengthen a relationship. That is what happened when my friend rescinded – it gave us something to work through, not a reason to be pissed at each other.

However, there are times when the ethical thing to do is call out frauds and cheats. William Black, an expert on fraud, who has testified before congress 4 times on our latest financial debacle, told us in an interview: “When you find somebody is unethical and you fire him you need to consider avoiding the advice you get from everyone and give him a negative reference. People have to take a willingness to get sued, and if that can’t work, then as a society, we have to give protection.” You can read the entire interview here:
http://www.noshortageofwork.com/pages/1557

Failing to do the right thing out of fear that despicable people will sue you is a form of cowardice.

Brooke

By A fan in Massachusetts
September 24, 2010 at 1:30 pm

Good people often fear “despicable people” for all kinds of rational reasons.

Sounds like you got burned, Brooke, in a couple of different ways at perhaps a couple of different times.

Nick’s idea/s sound wildly wise to me … talk about rare in this day and age. Common sense intelligently applied! If the goal is to sort of inoculate a good new hire from leaving quickly, what could be wrong with a spoonful of “affection” (great word, Nick!) and good will?

By Brooke Allen
September 24, 2010 at 3:48 pm

Mass fan,

I have never been personally burned by an employee or employer (or investor, or customer, or friend, or anyone else), perhaps because I am careful in choosing who I associate with. Even my friend who changed his mind about working for me is still a friend – I hardly felt burned. What did I say that makes me sound such?

On the other hand, every one of us has been burned by despicable people who were NOT called out by good people who could have. For example, even if you did not “invest” with Bernie Madoff, you’ve taken a hit if you have an interest in the integrity of our financial system. Many people (including ones I know personally) could have called him out, but as far as I know, Harry Markopolos is the only one who tried. Even the regulators who aren’t asleep at the switch seldom call out miscreants because of the rational reason that they don’t want to screw up their job prospects in the industries they regulate.

I agree with you and Nick regarding affection and good will. And, I agree regarding salary. My goal is to pay my people as much as possible, not as little. If my “range” is $100-$110K, but I can pay $112K, then, in fact, the top is $112K, not $110K, and so I want to find the best person I can at that level. Once people understand that is what you’re doing, the real key to “delighting” employees does not hinge on the marginal few grand, but in the intrinsic nature of the work, and the extent to which people care about each other.

NICK – I look forward to hearing from you. You know me quite well and I wonder if you get the things I’m trying to say.

Brooke

PS, Here is a thought? How much of all this could be resolved if you just get HR out of the loop? (Or better yet, out of the company?) I’ve found that when everyone just concentrates on understanding and respecting each other, and understanding and doing the work, the solutions to these other issues just become self-evident or pale into insignificance.

By Nick Corcodilos
September 27, 2010 at 10:01 am

@Brooke Allen: Your practices as an employer are unfortunately not the norm, or even common. If we didn’t have HR to contend with, we could negotiate more effectively with one another. If HR didn’t have compliance to worry about, it might behave more tolerably. If managers hired the best people after getting to know them well, a few more bucks worth of salary wouldn’t be (very) relevant (in most cases).

And you’re right: When the bidding ends, it should also stop. Make a decision and move on. And I love your reminder that the most important bid is not the last one, but the penultimate. That’s the one that sets the market value of the “product” – and the final bidder must respond to it.

But I think your most important point is about references. There is simply no way to “vet” a job candidate if you can’t obtain honest references. As you say, people are too often fearful of getting sued, so they say nothing. (My experience with people is that they are loathe to go to attorneys to begin with. They are afraid of the cost.) References are the coin of the realm in commerce. If you don’t know whether to trust someone, how can you do business? I’ve spent my entire career finessing the reference check. It means everything. Unless we talk about one another, we can’t know one another.

Which brings me to an interesting topic I’ve been ruminating on, though I don’t have a conclusion about it. This text from the Bible is a popular one, attributed to Jesus: “Judge not, lest ye be judged.”

People take that to mean that we should not judge others because we’ll be judged ourselves. I wonder if that’s what it means. Perhaps it means, Take care how you judge others, because you, too, will be judged. I wonder if the quote doesn’t mean, Judge others, just be ready to be judged yourself.

Much of Christian teaching is about taking responsibility for your own behavior. I think my interpretation of that quote supports that main idea. So go ahead and judge (and give references) – it’s your responsibility. But judge like you would want others to judge you.

(I’m not a biblical scholar, and I realize that the meaning of that quote rests on the actual words and on what they meant when they were spoken. But I like ruminating on this.)

By Brooke Allen
September 27, 2010 at 10:21 am

Judging others? Perhaps you could start a new thread on this one.

I am often moralizing – talking about what should be ideal behavior.

And my kids hate it – they keep telling me to stop judging others. And they are always calling me out as a hypocrite.

But that is the whole point. If I give my criteria for judging others, people CAN call me out as a hypocrite – and that is a vital feedback that I need to become the person I believe I should be.

I recently met an Afghan war vet, who had been a juvenile delinquent before a judge suggested he would be less inclined to sentence him to the slammer if he happened to be in the Army.

I asked him for the most important lesson he learned and he said, “Learn to apologize and don’t make excuses.” He went on to say he now sees most of the people in the USA incapable of apologizing and full of excuses masquerading as reasons.

For example, how many employees justify their own bad behavior as a reaction to employers who behave badly. This young soldier would say that is just an excuse. And, if you are a manager, and you are told by your employer to treat a subordinate badly, you need to resist, and if you fail, you must apologize.

Most of how I believe I should behave as an employer is informed by how I’ve been treated as an employee. And, as an employee, I learned early on that I can hold my employer’s feet to the fire – not through a threat of lawsuit, but by simply asking, “Tell me exactly what you believe in that compels you to act this way?”

So, the questions I’d love for you to pose to your readers is,

“Should you state explicitly what you believe in even if you hold yourself up to a charge of hypocrisy? Does bad behavior in others excuse bad behavior in oneself?”

Brooke

By A fan in Massachusetts
September 27, 2010 at 12:18 pm

“He went on to say he now sees most of the people in the USA incapable of apologizing and full of excuses masquerading as reasons.”

“Most of the people in the USA” – what, like 270 million of us or so? Are the kids innocent, at least?

Sorry – that’s a pretty broad generalization and a real slap at most people who really do the best they can most of the time.

Moms used to know how to deal with hypocrisy very easily – one kid gets to cut the cake, the other kid gets to pick the first piece.

Walk your talk, treat others as you would like to be treated and chances are you can avoid hyprocrisy altogether. Oh, and maybe not lump hundreds of millions of people in one particular country as not very good people. In my experience, most people are doing the very best they can do. Perhaps not your ideal of what they should be doing, but then that’s not who the world works.

By JaneA
September 27, 2010 at 4:30 pm

Nick, you mention compliance. I’d love to see you do a post on how the compliance thing could be more effectively handled.

The idea, as I understand it, is to make sure that people of diverse origins get a fair chance to be considered for a job, instead of me just hiring my buddies or family members because I like them (or feel obligated to). I have no problem with that.

OK, I’m in New Zealand, so I don’t know the details of how it’s done in the States. What I’ve seen of it here is that it doesn’t really help.

It just assumes that the resumes and interviews method is the right one, and we’ll make sure that our indigenous and other minority friends get an equal chance to have their applications added to that dismal system.

People in these categories may not know how the system works. OK, so we have to teach them.

Teach them what? All the stupid job interview questions and games!!

Why not teach them, instead, how to research a job and then show the hiring manager how they can do it?

Or am I talking nonsense?

By Nick Corcodilos
September 27, 2010 at 5:15 pm

@JaneA: Excellent questions – things we should be discussing. Or that HR should be discussing.

I think it’s insane that HR is responsible for compliance. If there are government regulations, then set up a compliance organization that competes with the recruiting function. Let the abrasion yield best practices that don’t leave managers without good hires. I’m all for giving everyone a chance, but I’m not for letting regulations turn a business into a bureaucracy. That doesn’t help anyone.

With HR advocating for compliance, who is left to advocate for recruiting? HR cannot do both. Therein lies the disaster every company is facing today. There is no debate. HR/Compliance shuts down anyone who wants to talk about how to get the work done. “Compliance comes first. Hiring good people comes after that.”

Bull dinky.

I agree with you: Rather than teaching applicants how to fill out dopey application forms, teach them how to talk about the job in a useful way. Teach them how to prepare to talk shop, instead about how to placate HR.

You are not talking nonsense. This is a good start on this topic!

By DLS
October 5, 2010 at 8:41 am

There are many good points from everyone.

I agree with Nick that I prefer to talk shop in the job interview and not answer the usual questions (eg, Where do you see yourself in five years?)

I’m still learning about the new way to find a job and company you truly want to work for. Thanks to all for your insight.

By An employee's view
November 11, 2010 at 8:32 pm

Hi,
I have just received a job offer for considerably more than the high end of the bracket advertised. Whilst initially taken aback and pleased at the offer, my family have suggested caution – are they too desperate?, what do they want for the extra money?

It is nice to see your above post of it being a good will gesture and I would like to think this is the reason behind the offer. It will certainly make me feel beholden to them (I would have felt compulsion to do my best even at a mid range offer) but interestingly enough I am now cautious as to the meaning behind this show of good will.

Would your view be that it is simply to secure the position and a gesture of good will, or are there ever other reasons to offering more?

Your thoughts would be extremely welcome

Many thanks

By Nick Corcodilos
November 11, 2010 at 10:47 pm

@An employee: I would take it at face value. They want you. Say thank you and do a good job. You need not feel awkward, or like you’ve been “bought.” Perhaps they just recognize that they will get good value for their money. They want you to say yes. And they want you to be happy. Go on those assumptions. If you find later that you’re mistaken, then deal with it. But my guess is this is a very nice gesture. Enjoy it without thinking too much about it! (And congratulations!)

By An employee's view
November 14, 2010 at 6:47 pm

Thank you for coming back so quickly greatly appreciated. Indeed I’ll be going for it. One quick last question, they have sent the job offer by email but should I wait for the letter before handing in my notice? Best wishes

By Nick Corcodilos
November 14, 2010 at 10:56 pm

@An employee: I would not rush to submit your notice unless there’s some reason you must. You might receive the letter in the mail, then wait until other aspects of the hire are processed. You could wait until you are quite sure everything is ready for you to start the new job – THEN submit your notice.

Most job offers work out just fine, no problems. (Believe me, I’m not trying to frighten you.) But rarely, something goofy happens. E.g., the company rescinds the offer, or you’re notified that you’ll be reporting to someone other than who you expected, or the title of the job changes, or the start date is pushed off later, etc.

Like I said, this kind of thing is very rare.

But I like to see as many of the details as possible solidified before advising a candidate to submit a resignation. I don’t like leaving anyone taking an unnecessary risk. Just ask yourself, are you confident everything is going according to plan? If yes, then go ahead. But be careful.

One thing I advise people to do: After you accept, get in touch with your new boss. Just have a chat. Don’t say or do anything that you feel awkward about, but consider asking about the assignments you’ll be getting. Explain that you’d like to prepare as best you can before you actually start. (Again, don’t do anything weird or imply you’re being pushy.) You might offer to come in and meet other members of the team, to facilitate getting started – even before your start date.

Things like that will let you see just how “ready” the manager is to get you on board. If indications are all positive, then you can feel more comfortable about tendering your notice.

I like to make sure a new job is as “sure a thing” as possible before giving notice. Follow your good judgment about this.

By pervanah
June 4, 2013 at 11:32 pm

I’ve a question: if I work for a company X that gives decent salary and decent profit share, and Company Y gives you an offer of better salary, but no profit share, but already their salary offer is more than the Company X salary and profit share combined by 20K, do I accept?(other factors to consider are too close, like environment and career development)

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