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Wednesday, July 7, 2010

Managing Salary Expectations During The Interview Process

As a recruiter, I have learned one thing about salaries: When I speak to a candidate to tell him/her about a job, I always tell them what the job will pay. I do this by giving a range. What I have learned is that no matter what number I say, no matter how much I stress the range, the candidate will only hear the highest number.

Unfortunately, very often when giving out an assignment, companies will provide a salary range that they want to pay.  Ultimately, when the job comes through, and they want to make an offer, the salary offer is often much lower than originally stated, sometimes even below the lowest number stated originally by the client. It happens frequently.

Here are a couple of examples which have happened recently:

• A divisional president’s job in the southeast was specified at $200-225; the initial offer came in at $180.

• A head of digital at a small agency: Job specified at $160-175, but the offer came in at $155.

• An account supervisor at a major NY agency is given to me at $75-80.  Job offer is made at $65.

• A fee paid search is given to us at $260 - $275 and the offer comes in at $250.

When an assignment is given to a recruiter (either an independent like me or an internal recruiter) the first thing we do is check our database. Inevitably, we will look for candidates making less than the low end of the specified salary, but we will also look at candidates whose salaries go up to or even slightly exceed the top end (this is why it is important for candidates to tell the truth and to keep recruiters apprised of raises).

During the interview process, candidates will psychologically lock themselves into the highest number while the company becomes wedded to the lowest. When offers are made at the low end of the spectrum or, worse, lower than the originally stated amount, there is often anger and disappointment – by both parties. Don’t blame the recruiter or HR person.

I thought it important to explain how this scenario develops and to propose a simple solution to the problem.

When a job is a replacement position, most hiring managers assume that the salary range will be what the previous person was making. If it is a new position, HR and senior managers will generally look at what other people in comparable positions are making and provide a range. In larger companies, there is often an approval procedure with the finance department.

The initial finance department approval is rarely final. On long and complicated searches, the time lapse from beginning to end may be such that there is a change in company finances necessitating a lowering of the new position’s salary level, often not discussed with the hiring manager, human resources or the recruiter during the candidate screening process.  But financial people don't really approve the hire until the candidate is selected.  It is only then that companies closely examine their budgets in order to approve the final salary.

There is one other factor which may affect the job offer.

I believe that many companies assume that candidates and recruiters are exaggerating salaries. I know that there are many candidates and recruiters who do that, but it only works against them. When offers are made at the lowest number, some companies do this as a test, while others do it as a hedge so that there is room to negotiate it upwards. This is one of the reasons why it is important not to overstate salaries.

The simple solution to this is that both recruiters and hiring managers (and HR, of course) should discuss and reconfirm salary expectations frequently during the interviewing process.  As Holiday Inn used to say, "The best surprise is no surprise."

A good recruiter can manage the salary expectations, provided companies stick to the original job specs. When companies are straightforward with recruiters (or candidates), the negotiation is usually easy and fast.

As always, I would like to hear your stories about offers which came in to low. I know my readers would enjoy reading them.

3 comments:

  1. One of the best productivity tools is to surprise a new hire with an offer on the high side. Ironically, this can also be less expensive. How so? Low ball initial salaries often lead to early reviews and quick bonuses. More generous compensation not only creates good will from the get go, but also leads to longer term satisfaction and fewer demands down the road.

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  2. The organization has a dedicated space for updated article posts that updates its readers with latest feeds around the world pertaining to the prevailing cost of living of different countries. Recent survey has found that Tokyo and Beijing are the costliest Asian cities for expatriates. Owing to weaker yen, the country fell from a previous position of 1 to10. Readers can refer to the blog post at Salary Expectation that enumerates the best US cities to work.

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  3. Todays,Payroll plays a major role in large and small company.Payroll can play its role for many reasons. Payroll is the total financial records of salaries,wages,deductions and bonus of the employee.That company provide service to the employee for certain period of time.

    Regard

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I would welcome your comments, suggestions or anything you would like to share with me or my readers.

 
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