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Increasing Offer Acceptances When Your Company Pays Crummy Wages - Part I

06-Feb-2009

How to convince candidates to accept below-average salary offers ...

I recently overheard several people talking about an employment offer one of them had recently received. The candidate, who has received three promotions in three years with her current company, was so under-whelmed with the offer that she was insulted and happy to discuss her disgust with others.

The offer, from a well-known company, required the candidate to take a drop in title, relocate to a city with a significantly higher cost of living at her own expense, and all for a $1,500/year increase in salary. Having spent a month chatting on the phone and in person with the company, this candidate was frustrated. Unfortunately, this situation happens all the time.

Do you work for a company that pays below-average compensation for your industry? Do you get embarrassed when you have to present offers to candidates that you know they will perceive as ridiculous? These situations are never fun, but there are some things you can do to increase offer acceptance rates when great pay is not an option.

Putting Your Mindset in Check

Before you start recruiting, realize that low pay is not as big of a problem as you might think if you know how to take the spotlight off of compensation. There are millions of people who work in poorly paying jobs but are satisfied and engaged. For instance, almost everyone in education, government, the military, childcare, and not-for-profit organizations work for far less money than they could get if they worked in other industries.

Huge segments of the population are willing to work for organizations that pay poorly, provided there are other aspects of the offer that are more compelling. Although many individuals turn down offers by saying, "It's the money," in many cases it really isn't the money, or at least, not the money alone.

The real reason people reject job offers can be identified by simply calling candidates who rejected an offer three months later (after they have found another job and the pressure is off). More often than not, you'll find it wasn't the money, but rather that they were treated poorly during the recruiting process.

There are three recruiting process points to focus on if you want to solve the "low salary" problem. The first deals with actions to complete prior to starting the recruiting effort. The second focuses on things you can do during the recruiting process, and the third focuses on what can be done during the offer process to improve your chances of garnering an acceptance.

First, Things to Do Before You Start Recruiting

Design your recruiting process in such a way that you don't set yourself up for failure. If you recruit from the ranks of the fully employed during positive economic cycles, you will consistently encounter issues with offers that are below or near the candidate's current rate of pay. Unless, of course, the candidate is fleeing some extremely negative situation and does not have an opportunity to shop for the best offer.

If you exhaust all attempts to improve the compensation structure, here are additional actions to take:

  • Develop a sales sheet. Survey your current employees who love their jobs, and use these reasons in recruitment materials. Provide this information to hiring managers so they can focus conversations on the non-soured aspects of the company. Quite often, job security, a fun atmosphere, and employee involvement come ahead of compensation in many applicants' decision criteria. In short, don't try to be something you're not. Instead, sell and be proud of what you are.
  • Rely heavily on referrals. Referrals work especially well in low-paying environments because your own employees are likely to do a better job of selling the non-monetary compensation aspects of the job and company. Employees are also good at screening out people who wouldn't fit the environment, and the referring employee (if encouraged) often will help "sell" the candidate during the offer process.
  • Be upfront about not wanting "compensation first" individuals. It might seem counterintuitive, but it's actually a good idea to let people know upfront that your company seeks people who "care about the work" and that you purposely do not hire individuals who have compensation as their primary focus. It's a fact that people who put money first are harder to manage and are a greater retention risk. Southwest Airlines and Ernst & Young are particularly good at this approach to recruiting.
  • Cost of living comparison. If you happen to live in a low-cost living area, do some calculations in order to show candidates that even though the pay might be lower, the "relative pay" might actually be higher because housing, transportation, and other expenses are relatively low in your area.
  • Build a relationship. If you can, pre-identify targeted candidates and build a relationship with them over time. Candidates are less likely to be shocked when they hear about the lousy pay and are more likely to trust you when you say the excitement of the job overcomes the low-pay aspect. Consider giving targeted individuals samples of your products to evaluate, or even involve them in a project as a consultant on nights or weekends so they get to know your team well.
  • Seek out candidates with a hook. Target your recruiting to individuals who have some tie or "hook" to your local area. Quite often, individuals with family ties, those who went to school in the area, or those who used to work for your firm (boomerangs) are more willing to accept a low salary for that chance to return home.
  • Quality of life. If you live in an area that has a low crime rate, lots of amenities, great schools, short commute times, or wide, open spaces, put together a convincing argument as to why your area is desirable, regardless of the pay involved. Put this and other positive aspects in all recruitment communications.
  • Promotion rates. The MGM Grand Hotel in Las Vegas isn't shy about communicating the rate of promotion are much higher than equivalent properties in big cities like New York. If this is true for your organization as well, demonstrate that while starting salaries are low, in just a few short years they would be making more money, have more responsibility, and a better job title than they would have had at another organization.
  • Target low-pay industries. Focus your recruiting on individuals working in low-paying industries like education, government, retail, or healthcare. They already know what it's like to work for low pay, so it won't be a shock when they find out you pay below the average. Also look at individuals who volunteer a lot of their time, because they are more likely to put "making a difference" ahead of money. You might also target retirees and Gen Y and M candidates, because quite often, they put their profession, flexibility, and other factors before money.
  • Target companies in turmoil. Seek employees at companies that are in economic trouble and people who have been laid off, because those individuals generally learn (at least in the short-term) to regard job security and stability over pay.
  • Build a great employment brand. Although it's a long-term strategy, by winning awards and "being talked about" in the media as a great employer, you can double your application rate, while simultaneously attracting individuals who want to work for your firm so badly that the amount of money they get paid is a secondary issue. Consider Google, Pixar, Apple, Starbucks, Procter & Gamble, or Timberland.

Second, Things to Do During the Hiring Process

During the hiring process and before the offer is made, take the following steps to increase your chances of getting an offer accepted:

  • Don't insult them. Ask them before the start of the interview process, "What is the minimum salary you need to accept an offer?" Also, ask them to identify any deal breakers like title, travel required, weekend work, etc., so you know in advance what you're up against.
  • Identify job-acceptance criteria. Be direct and ask them to list and rank their job-acceptance criteria. Use these criteria to guide your interview and offer process. If they put salary as number one, realize upfront that your chances are much smaller to win them over. If you're really bold, ask them to outline their "dream job" and then try to meet each of the non-compensation-related items in your offer.
  • Peer interviews. When coworkers interview applicants without managers present, candidates are more open with their concerns and coworkers are better able to make convincing counter-arguments because they hold the same job.
  • Two-year projections. Everyone wants to know where he or she will be in a few years, so give concrete examples of how previous hires have actually progressed. Explain where they might reasonably expect to be in two to three years after they join your firm.
  • Side-by-side comparisons. Managers are generally bad salespeople (to be kind), and they need "sales" help. They generally need aid in the form of information that tells them what candidates generally expect and what the competitive job market is offering. A "side-by-side" benefits sheets for use during the interview process that demonstrates what the competitors are offering can highlight why your firm is clearly superior.
  • Seek feedback during the interview. Periodically ask the candidate during the interview process, "Are we close?" or "Do you see any roadblocks?"
  • Who would you like to talk to? Ask them, by title, who they would like to talk to during the interview process. By providing them some choice, you might excite them but also give them the opportunity to gather the information they need to say yes.
  • Sell. Spend at least half of the time during the interview selling the candidate.
  • Be selective. Only let people with the best "sales skills" sit in on your interviews.

[Source: ERE Daily article by Dr John Sullivan, June 25, 2007]

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