Brought down to the simplest terms, more experience, skills, education, training and certification will bring with it more compensation. Job seekers price what they have to offer, hiring companies make offers and the two come together to determine a market value for a particular position. On the line chart below, we can see that the further out we go with experience, skills, etc., the higher we go in compensation.
In theory, at least, we could draw this line for any position. The line may not always be a straight incline. It may spike if a certain desirable criteria is met (MBA for example,) or it might go flat if additional experience or training does not add value to the job. But, in any case, good talent is going to live on or around the line because market forces drew the line – the ongoing give-and-take between job seekers and hiring companies.
I have met a lot of candidates in today’s economy who have found that their salary expectations are not in line (no pun intended) with the market – position X on the next chart. That’s a difficult and emotionally charged situation to come to terms with. However, continuing to hold out for a position that pays what it used to, instead of what the current market is willing to offer is not a solution. It’s hard not to take it personally. I encourage these candidates to take a two-step approach to their predicament. First, understand the prevailing compensation for your package of skills and experience and aim your job search at those positions. Second, work out a mid-term plan to reassess your needs and to re-train for a career shift. In other words: earn what you can for now and begin preparing yourself to come to the market again with a new package to offer.
In smaller and mid-size companies it’s becoming more common for me to see job orders with unreasonably low compensation packages – position Y on the chart. I think this is driven by the need to lower costs/work with less and by the idea that the current unemployment situation must contain good people willing to work for less money. This idea – that you can find an excellent candidate at below market rate – is almost always doomed for failure. The right place to look for an excellent candidate is on the line. Yes, there are a lot of good stories out there that go something like, “I found this guy who [insert great skills and experience here] but then [insert some extreme situation here] so he didn’t want to go back to [insert great job here] and I got him to work for me at [insert ridiculously low salary here.] Best hire I ever made!”
I’m not saying it never happens; I’m just saying that hoping it happens again is not a good plan. Finding a ten-dollar bill in the parking lot on your way to the office is a nice way to cover lunch today; it’s a bad plan for eating on an ongoing basis.
When you identify a job seeker as an excellent candidate, you are probably not the only interested employer he or she has interviewed with. So the odds of landing a truly competitive candidate at below market compensation are not good. If you are successful in landing the candidate -
unless you have some compelling reason for him or her to stay with you – you are likely to see your new employee leave as soon as a more competitive offer comes through. And no company can afford turnover that can be prevented.
I remember an old comic from when I was a kid. The one guy is looking for something and his friend asks what he’s looking for. It goes
something like this.
Joe: “I lost my wallet.”
Mike: “Then why are you looking here in the kitchen?”
Joe: “Because the light is better here.”
The place for you to find the employee you are looking for is on or around the line. Looking for a competitive advantage by hiring talent below market compensation actually puts you at a disadvantage while you spin your wheels, make bad hires and lose key staff to your competitors.