The Art of Navigating Compensation – Part 1
By Lou Adler
As the economy strengthens, negotiating compensation will become a huge part of the recruiting puzzle. Before you even get to the negotiating part, navigating through the maze of compensation issues will become a prerequisite for sourcing, recruiting, and hiring great talent, whether they’re passive or active.
This series of articles will help you handle candidate compensation issues at every stage of the process. Success using these techniques will enable you to minimize the overall compensation paid to top performers, reduce the chance of a counter-offer, and ensure that your opportunity stands alone amongst competing offers, even those that include a heavy compensation increase.
Following are the big topics we’ll be covering in this series of articles:
- Presenting the case for a “Growth Maximization Strategy” vs. falling into the black hole of a “Compensation Maximization” approach to career management.
- How to put compensation into the parking lot on first contact.
- Navigating compensation during the interview.
- Testing the offer and closing the deal.
The Max Growth or Compensation Career Management Strategy
One of the key differences between top performers and everyone else is that the best people typically have some type of formal career plan in place. The last few years have generally been unkind to these plans, but once the recovery gets some legs they’ll be dusted off and put back into play. Companies can take advantage of this in a number of ways. The most important: offer these top people a career opportunity, not a lateral transfer. Unfortunately, during the rush to source and hire these people, this long-term career concept might get lost in the hustle of negotiating the offer. In fact, once people start shifting seats en masse, your best prospects are likely to begin each conversation with a recruiter with some form of a “what’s the comp?” question. If you can’t answer it properly you’re likely to unnecessarily lose a lot of these great people before they even get in the door.
To ensure these people who think compensation is important get into your prospect pool, you’ll need to understand the differences between a growth vs. a compensation maximization career strategy. In future articles in this series I’ll show you how to naturally insert this concept into whatever comp question is asked.
A career growth maximization strategy is based on the concept that rapid growth and learning leads to bigger jobs and more rapid promotions. Significant compensation increases follow growth rather than lead it. A compensation maximization strategy is based on the idea that a person needs to make sure each move results in a major compensation increase. Over time this approach will lead to a rapidly increasing compensation package. At least that’s the way the thinking goes. It’s flawed thinking and recruiters need to make sure they don’t fall into this trap.
A lot of bad things can happen when a short-term compensation maximization strategy is used to make long-term career decisions. A comp max approach typically puts the new hire into the upper levels of a salary range, leaving little room for future salary movement, even for doing good work. This is frustrating. Worse, higher salary levels leads to higher expectations of performance, and when not met, the person is considered underperforming. Since the person is “overpaid” given his or her experience level the person is unlikely to meet the elevated job expectations, and even less likely to exceed them. This leads to a cascading negative effect and deep frustrations for both the new hire and the hiring manager. This is how a comp max strategy can quickly lead to career stall and a plateau.
A lot of good things can happen when a growth maximization strategy is used to compare and select one of several competing job opportunities. For one, by entering in the middle to low end of a salary band, job expectations are somewhat lower. This gives the new hire a real shot at beating the lowered expectations, being given above average raises as a result, and more important, being assigned to take on bigger projects. Successful performance on these projects in turn leads to promotions and consequently bigger raises. A good rule of thumb when advising others (and even for yourself) – there’s more upside being underpaid than overpaid for the same work.
Managers and business executives tend to be more open-minded with people who are willing to “prove” their worth rather than having to be paid in advance for it. This psychological aspect alone offers a huge benefit to those who pursue a growth max career strategy. There’s much less strain in negotiating the offer, and much more tolerance on the part of the hiring manager when things go awry. Just the negative aspects of negotiating an offer for someone who wants to get the best offer possible put the new hire in an awkward position. In my opinion the short-term gain in compensation is not worth the long-term costs.
Top people innately know that progressing rapidly is the key to maximizing compensation. Average performers tend to focus on maximizing compensation in the short term while ignoring the long-term costs and negativity involved. As recruiters, it’s important to quickly address this difference whenever a candidate asks about the compensation before being willing to discuss the career opportunity. This is a critical step in the recruiting process you need to deftly handle.
Many top people use the comp question to quickly filter out the cacophony of opportunities that come their way. Interestingly, most of these same people will make a career-oriented approach to evaluating different opportunities once they’re presented with the facts about the opportunity. That’s why recruiters need to fight through this question in order to present their opportunity-based case.
The key to this is with some type of attention getting mechanism. We’ll cover a number of these in Part 2 of this article series, but here’s one of my favorites to get you thinking about this important transition point. Whenever someone asks me “What’s the compensation,” I ask for a time out. I then ask the person to think about an extremely satisfying job-related experience. I then ask if the high degree of job satisfaction was related more to the work the person was doing, or to the compensation received. Most say the work itself. Bingo! I then ask, “Wouldn’t it then make sense to talk 5-10 minutes just to see if the opportunity I’m handling offers this same type of career satisfaction as long as the comp package is competitive?” Most readily agree.
During the pursuant conversation I’ll describe the differences between the career maximization vs. compensation maximization career management strategy. This is a great way to differentiate yourself as a recruiter and establish instant credibility with a top performer. They’ll quickly see you as a career advisor and someone worth knowing. Whether you ultimately decide to pursue the candidate or not for your opportunity is up to you, but you’ll certainly want to connect with this person on LinkedIn. Don’t be surprised if you get some great referrals in the process.
Reposted with written permission from the Author Lou Adler
Precision Recruiting
Ottawa: 613-287-3767 Toronto: 647-727-4737 Web: www.PrecisionRecruiting.ca
