Hiring Below Market Isn’t CheapMGR Accounting Recruiters in
As I write this we have been working to fill a position for an employer where the salary range is below market. The economy has picked up, and these professionals have become more in demand. We advised the employer of the issue in the beginning as well as during the process as problems arose, but the experience has caused me to realize this list would be helpful.
When you haven’t filled a particular position for some time, the market salary will have changed. Attempting to fill a position at a below-market salary may help contain direct costs if you succeed, but there are indirect costs that can be caused by the issues listed below. Issues that may arise are:
- Turn-downs. Frequently candidates pursue multiple opportunities, particularly in a good job market. So while the candidate may be moving through your process, they likely are doing the same with others. If they sense the range for your position is substantially less than other opportunities, they are likely to more aggressively pursue their other options. Proceeding through the whole hiring process only to be turned down by the candidate is not only costly, but frustrating.
- Withdraws. Although not as bad as a turned-down offer, candidates withdrawing from consideration is costly as well. If you have a second choice candidate, the situation may not be as bad. But if you have delayed the process while waiting for your first choice, then you run the risk of losing the second choice candidate as well, thereby having to restart the process.
- Under-qualified candidates. Candidates you attract may also be lacking key qualifications. People that are interested in the lower salary are likely to also be of lower experience. You will have to sort through more people to find those with appropriate qualifications, thereby causing you to have to invest more time.
- Damaged reputation. Candidates that are offered the job at a lower salary than they can accept often feel betrayed. They become attached to the idea of joining a company during the process, only to find out that their perception of the opportunity was incorrect. This does much to damage the long-term recruiting reputation of the employer. Candidates talk, and such an issue can limit the qualified candidates that are interested in future openings at your company.
- Disloyal employees. Low offers are sometimes accepted, but frequently it is a stop-gap measure for the candidate. They may continue their search after starting to work for you. Obviously turnover is costly, but if this happens too often then future candidates will start to wonder what is wrong with the position and are less likely to apply.
- Hiring mistakes. In an effort to fill a position at a lower-than-market salary, sometimes employers will end up hiring an individual that appears to have the qualifications only to find out that there are deficiencies in their ability. This creates a need for additional training which has associated costs itself. Ask yourself: If we are paying lower than market, why is this person accepting? It’s possible the candidate isn’t aware of the market salary, but that won’t last forever. There usually is a reason they are commanding less than other individuals, and that reason will most certainly show in their performance later.
The next time you embark on filling a position that you have not filled in a while, make sure to research current market salaries for that role. The time you spend to determine the appropriate salary range will be saved multiple times over later in the process.
As always, I wish you the best in all your hiring efforts.
Mark Goldman CPA