The Problem with Getting Champagne-Quality Talent on a Beer Budget

As recruiters in a sluggish economy, I’m sure there are plenty of stories out there about how companies are looking to obtain top talent at bargain prices. Kind of like having “champagne tastes” while only wanting to pay for a beer. I’d like to address this with the hope of providing some education and also learning what some best practices might be to combat this. As a recruiter that has been through many different markets, I know the downside of this type of hiring practice. In most cases, it is an unhappy ending for the company… and a frustrating experience for the candidate.

When the economy changes for the better (and it will…eventually), the candidate that took a 20K pay cut to get back to work will quickly seek out a new position. It’s inevitable and frankly should be expected – especially if the new offer is below market value. What I ask is that hiring managers look at the big picture. If the position and budget allows, it’s best to get the candidate as close to where they were previously (of course this does not apply if a candidate was earning well above market value). Why? It will take more than that 20K in the long run to replace this person, not to mention the time and cost of training that hire that left prematurely.

Here’s an example of this happening. I had a hiring manager who had been looking to fill his position for 4 months. No one was an exact bull’s eye…until our perfect candidate came along. The candidate had recently been laid off from a competitor. My hiring manager immediately went through the process and along came offer time. The candidate had been earning 100k and my hiring manager felt that we could get the candidate for 80K since the market was down and the candidate was unemployed. After a series of discussions, the hiring manager held firm and we presented the offer. The candidate accepted, went through the training program, was introduced to the clients and was formally integrated….only to leave in 9 months for a job paying 120K with another competitor. Ouch!

What are you experiencing? If you are a recruiter delivering this message to your hiring managers, how are you doing so? Conversely, if you are a hiring manager, I’d love to hear your perspective on this subject.

Originally posted on Recruitalicious

Comment by Dan Bonner on June 4, 2010 at 1:17pm: Nice post Stacey!!! I work in a smaller market where the culture lends itself to the exact type of thinking you describe in your post. Because I've seen the, " Ouch! outcome," too many times, I really have to walk my clients through the process of developing an acceptable offer. I start with the question of... do you want to hire the candidate or do you want to take them off the market? Helping them understand what's involved in taking a candidate off the market gets the client looking at the big picture. Here an offer is built commensurate to an individuals worth and not based on how much of a cut in salary they're willing to accept, for now. I've seen it too many times, what the Hiring Manager is able to get them for is the same thing they lose them for when the market strengthens.

Comment by Stacey Grimes on June 4, 2010 at 2:32pm: Thanks Dan! Your comment is much appreciated. I like the approach you take with the hiring managers as it's very consultative.

Comment by Sandra McCartt on June 4, 2010 at 6:17pm: Just had one of these. Three sales reps hired. The offer to the third was much lower in base than the other two. Same level of expr. I asked why? Hiring manager said, he is unemployed. I said, so are the other two both of them were laid off in the last two months. Hiring manager said, candidate 3 has been unemployed longer.

Sometimes my thoughts come right out my mouth..i just can't help it so i said,

"That's Chickenshit". There was a long pause, a very long pause, a very, very long pause during which my life expectancy with this client flashed before my eyes.

Hiring manager cleared his throat and in a somewhat lower tone said, "Offer him the same base as the other two."

I quietly said, "Yes Sir, i think that is a wise decision".

Hiring Manager sort of laughed and said, "You Texans are a bonofide piece of work, you will say anything."

I said, "We in fact are but it's my job to be sure that nobody thinks my clients are chickenshits".

Thank God he finally laughed. Only time will tell if i ever get another listing from this chicken...er uh, fair minded gentleman.

Comment by JR Fent on June 7, 2010 at 4:26pm: EXACTLY! In Software Development. we are seeing a much lower than average unemployment rate
and we're still seeing hiring managers that will try take the short term gain and be very disappointed later on. We had this happen at a particular clients office and we tried to warn them that it doesn't take much to have the candidate (turned reluctant employee) to bail out for a better offer. It's tough for a company to recoup hiring and training costs if the employee can be lured away within their first year. I use this story to try to sway hiring managers into being more fair with their offers and would emphasis that the accelerate employee reviews and raises to show appreciation to the EMPLOYEE to gain loyalty to the EMPLOYER.

Stacey - thanks for the great article. I'm going to use it as part of my consultative discussions with hiring managers.

Comment by Stacey Grimes on June 7, 2010 at 5:03pm: Sandra -
Thank you for the laugh. That is a great story! Great example and I'm glad it had a happy ending.

IR Fent - Thank you for your comment. I think being a consultant during these times will yield great returns.

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