Paying Below Market Value for Talent

April 30th, 2013

In today’s competitive business environment, hiring the best talent available in the marketplace is a goal or target for almost all companies. However, following through and doing what’s required is a different story for a large percentage of those same companies.

To do this requires providing more candidate value than someone else – either a current employer or a competitor also looking to hire / retain A-level talent.

Candidates find value in four areas:

  • Job responsibilities
  • Professional challenge
  • Promotion potential
  • Money

Of these four areas, the money presented to a candidate – in the form of a salary offer – has to meet the candidate’s expectations, not necessarily be the amount the company thinks the person deserves or is worth. It is not really “all about the money”, but the value the offer intuitively conveys. Offers send a message to candidates validating their “perceived value” to the company.

This message is an emotional reaction, based on expectations. To generate a positive response, expectations must be managed and met in order to hire the cream-of-the-crop talent. When companies do not either properly manage expectations or generate offers meeting expectations, offers will be readily rejected.

During the hiring process, the candidate’s emotional reaction is what really dictates his/her response.  The job has not yet begun, so all the other areas of value – job responsibilities, professional challenge, and promotion potential -are imagined and have to be in line for salary to make the necessary impact.  However, the salary offer is the biggest concrete indicator of perceived candidate value at this point in the relationship between company and candidate.

To hire above-average talent, companies need to be able and willing to make above average offers.  Very few people are willing to leave a position where they are already well paid, valued and respected for offers that don’t meet expectations and bring into question already earned respect and value.

It would be like leaving a happy marriage for the risk of a potentially happy one.

Salary vs. Compensation Package

The overall compensation package cannot make up for a low salary offer.  In most cases, bonus and equity are not guaranteed, and it is this lack of a guarantee that makes a candidate question the conveyed value. It is all about the salary inducement the company is willing to give that conveys the value.  Again, it is not the size of inducement, but whether it meets and/or exceeds the reality managed (or not) candidate expectations. Companies must focus on candidate expects not their reality to hire the best and brightest in a vacuum.

Attention to Detail, be Proactive

To successfully build a team of A-players, companies need to proactively look at changes necessary to bring in high-caliber talent; the same processes and decisions in place currently don’t apply. One of those changes is to evaluate potential compensation levels.  Salary ranges must be broad and high enough to allow offers to compliment high-caliber talent. All-star talent equals all-star money.

Candidates do not exist in a bubble. Competition will sneak in.  Current employers will work hard to keep their A-players.

When compensation is ignored, companies lose the fight for talent.  Salary ranges need to be analyzed and kept above market.  When the “right” candidate is identified, use upgraded ranges and decisively make the above average offer, demonstrating the company’s ability to recognize “A-players”, send the right message, and get them on board.


The first formal offer is the one that impacts the candidate’s intuitive feel of value.

If the initial offer is low, odds are top candidates will lose their enthusiasm for the position/company.  Hiring A-level talent is not like buying a house or a car.  Companies willing to embark in tough negotiation battles by making marginal offers do not convey the same value as an initial offer meeting the candidate’s expectations; the romance has already been removed from the relationship by trying to get the deal done and save money at the candidate’s expense.

Honer &  Associates

Money will not cause an A-level candidate to turn down the job offer.  Rejections and acceptances are a direct result of the way that the salary offer makes that person feel proportionate to their expectations.  At Honer & Associates we understand this; we have specialized in talent acquisition for over 30 years.  We work with clients across the country, helping them successfully acquire A-level talent.  To discuss this topic or others, please contact us at your convenience.

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