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Data vs. Reality: Land Better Talent by Adjusting Compensation Packages
For organizations across all industries, hiring excellent talent is getting harder. When seeking those with deeper backgrounds, such as senior managers, directors, or executives, it might even seem impossible to land the talent you really need. After all, market insights may suggest certain salaries for certain roles, but in practice it’s not so simple. Reconciling data with the reality of what it takes to hire exceptional candidates today is the answer, and that requires adjusting compensation packages.
Understanding the Market Data
There’s no question that raw data of what candidates are actually earning in their current (or similar) roles is essential for starting a foundation. Reviewing specific industry salary surveys, speaking to peers, comparing job descriptions, reviewing your company’s previous hiring patterns, and other activities can all be helpful in building a baseline of knowledge. However, your competitors are accessing the same sources and putting together similar total compensation packages as a result.
How can you stand out? If a competitor has a seasoned Director of Operations earning a $160,000 base salary plus 25% in bonuses and 20% in long-term incentives, and you’re targeting that experienced individual for your open position, you’ll need to offer them a package that goes above and beyond those market rates to secure them. Since most companies don’t hire for their high-level roles very often, they can become disconnected from this reality.
Previous Chief Talent Officer of Netflix, Patty McCord, finds that another distinct downfall of adhering closely to market data is that it is too focused on the past and doesn’t take the future into account. While not every company has the hiring budget of Netflix, she suggests concentrating on the roles that are most important for helping you reach your future business goals and pay what you can afford with future results in mind. In other words, there’s more to consider than what market compensation data tells us. What do candidates truly want, and where you want your business to go?
Moving Past the Market Data
For example, let’s assume you want to hire a seasoned Vice President of Marketing in Denver and that the data says a top performer in this role earns $197,000. You’re lucky enough to find an experienced, A-level candidate and have put them through the interview process. Most likely, that person is already employed in a similar position and currently earning at least $197,000. In order to entice them to leave their role, you will have to think about what you are willing to offer them.
According to Business Insider and workplace expert Lynn Taylor, talent expects to earn 10-20% more than their current salary when they take on a new job. Professionals, especially those in higher-level roles, are simply not enticed by lateral career moves. In our above example, that means offering upwards of $216,000. Paying slightly more than expected for the right person who can help your company reach its future business goals can be a more effective hiring strategy than spending months searching for an acceptable B-level talent who may accept lesser pay but lack expertise.
However, this mentality doesn’t mean that inflating base salaries is the only effective compensation method. Should you find it cost-prohibitive to offer a larger up-front salary, consider including more long-term incentives in the compensation package. A time-tested Harvard Business Review strategy suggests giving performance-based incentives or equity in the company. This can be attractive to ambitious managers and executives, and means their positive impact and subsequent revenue generation could even cover their compensation on its own. If that VP of marketing costs $216,000 per year but they create added earnings of over $1,000,000, isn’t it worth it?
Playing to Your Strengths
Salary and other financial incentives might take the spotlight when it comes to creating compensation packages, but what happens when your competitors follow the same suit? What’s to stop someone leaving your company for a 15% pay increase? What can capture the attention of great talent, convince them to come on board, and retain them?
Think about the biggest strengths of your company and use them as part of your compensation packages, as the cherry on top that closes the deal. These strengths could be practically anything. Are you home to a healthy and fun culture? Does the company promote comradery through regular events? Is your office state-of-the-art, or is your location prime? Can you offer better work-life balance than other companies, or enticing career progression? Employment offers aren’t solely made up of numbers, so don’t forget to sell the entire company and the role at hand, not just the salary.
Adjusting Compensation Packages
Salary data can only provide so much actionable information. Calculations can tell us what happened in the past, but they don’t respond to what the market is saying right now when it matters to a specific job in a certain company and location. While helpful, data is no match for reality. Start adjusting compensation packages to better meet what candidates are looking for today, and your hiring and business will thrive into the future.
Need a hand finding the right talent for your critical open roles? Learn more about how Refine Search can help.
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