by Chad Oakley
Chief Executive Officer at Charles Aris Inc.
I graduated from business school in 2000 and let me tell you, those were the good old days for job seekers. Offers were plentiful. It wasn't uncommon for my fellow MBA graduates to receive four or five offers each, and often from companies they weren't terribly interested in joining. Every company was looking to grow, and top talent (and perhaps even mediocre talent) was in huge demand – not just for MBAs but across all levels of corporate America.
Remember 2007? Right before the start of the Great Recession? Same scenario. Every company on the planet was looking for talent, and candidates were in control of their selective destinies. Good talent could command inflated salaries and decline any opportunity that wasn't perfect, knowing that another job offer was right around the corner.
Well, after roughly eight years of fighting our way out of that recession, I'd like to make it official: The candidate market is back. In other words, candidates are once again in command of the job market.
At this moment, many of you might be saying, "Where have you been? It's been this way for the past few years!"
Yes, at Charles Aris Inc., we've certainly witnessed the tide shifting from a company-driven market to one driven by candidates. But at this point, make no mistake – candidates are in FULL control. I'm talking the likes of what we all witnessed in the go-go years of 2000 and 2007.
For those of you in hiring positions, let me take a guess at what you might be experiencing these days: (1) offers routinely accepted just two years ago are no longer getting the job done. Worse yet, many candidates don't even care to negotiate those offers, and instead politely decline without further comment. (Any chance you've heard, "Thanks for the offer but I just don't think we're going to get there on this one."?) (2) You increasingly find that your company is "one of a handful of options" any decent candidate is considering. (3) You find yourself feeling the need to go into "sell mode" even before the interview process starts, as though the candidate is – surprise! – actually interviewing you.
Some of this may sound extreme. As the president of an executive search firm that will complete roughly 150 searches this year, I can assure you: It isn't. For at least the next year or two (barring an international disaster or economic collapse; fingers crossed), this is the new normal. But let's not lament what we can't control. Instead, let’s focus on what we can.
Below are five best practices which we strongly encourage our clients to embrace immediately to lessen offer turndowns and increase acceptance rates:
Move faster than you did before
We've all heard the phrase "time kills all deals," but never is that more true than when recruiting talent in a hot market.
A candidate's interest will naturally wane over time in any market, but add competing offers to the mix and it's a whole new ball game. Suddenly, your normal four-to-six-week interview process finds itself losing out to those of speedier competitors. I beg you not to be one of those hiring authorities who say, "Well, if they have pursued another option then it's clearly not meant to be." That's a cop-out. The vast majority of good candidates don't "pursue other options," but they will listen when they are indeed pursued!
I can't tell you how many times I’ve heard candidates say something like, "You know, I really liked your opportunity, but this other company got me through their process and made the offer so quickly … they needed an answer by Monday … a bird in the hand is worth two in the bush … "
Instead, adjust to meet the market. Make interviewing candidates a priority. If certain people on your interview panel are traveling, find a replacement or have them videoconference with the candidate. And if your offer approval process takes longer than 48 hours, then it's too long. A candidate's interest is at its peak when they leave the interview. Don't squander that excitement by taking a week to extend an offer. Get it out quickly!
Lead with your best offer
In a down market, companies can get away with a little lowballing because they're in control. But not in a hot market.
When candidates have options, they tire and become impatient quickly – and there's no faster way to test a candidate's patience than to extend an offer that everyone knows is below market. We strongly recommend starting with your best offer right out of the gate.
"But what about those candidates who love to negotiate?" you might ask. Tell the candidate up front, "We're so excited about the prospect of you joining our team that we're starting with our best offer. We hope that you find it compelling, as we truly don't have the ability to adjust it further." You'll be surprised how many candidates will respond positively to this level of honesty. Yes, they might test you a little, but if you stand pat they tend to settle down quickly.
Manage internal parity
I once saw a presentation on asset valuation which effectively said that timing can impact the price of an asset by plus or minus 25 percent. Take a house valued at $100,000: In boom years, that house may sell for as much as $125K but as little as $75K in downturns. The same is true for talent, and we're in a boom cycle.
This challenge can wreak havoc for any company that has teams of similar employees who are all paid roughly the same amount. How can you justify paying the new guy more than the experienced team members who have a track record of outperforming? Hard to do but necessary in the current market.
Option 1 is to raise the compensation of the team to match that of the market. Clearly, this is quite expensive and may be cost prohibitive, but it is a smart move if you want to increase your retention rate. Option 2 is to get creative with ancillary components of compensation, such as sign-on bonuses and one-time equity grants, while keeping core components such as base salary and annual bonus in line with the broader team. One of our most creative clients keeps base salary the same as the existing team but issues two-year sign-on bonuses (i.e., a sign-on bonus in both the first year and the second year), which most candidates treat the same as base salary since it's guaranteed compensation.
Sell, sell, sell
The best companies in the world sell the benefits of working there, and they do it better than the other guys. Become one of those great selling companies!
Top talent changes jobs for Four Reasons:
(1) The Company: the compelling story that makes your company exciting
(2) The People: the talent level, management style and culture of your company’s team
(3) The Job: the roles and responsibilities which ensure that this position will have impact and exposure
(4) The Opportunity: the career and financial goals which can be obtained through superior performance
If you want to be one of those great selling companies, follow this best practice: During the interview process, make sure that each interviewer spends 10 minutes selling the candidate on one of these four areas about your company.
Re-recruit your best people
I told you earlier that top talent changes jobs for Four Reasons. Well, top talent also stays in jobs for those Four Reasons.
Remember to re-recruit your best people on a regular basis. Make them a part of developing the vision for your company. Ensure that they are happy with the people they are working with. Ask them regularly if they feel they are making an impact and getting exposure. And confirm that they believe there are ample opportunities for advancement.
Let’s face it: Recruiting in a boom market can be incredibly challenging, but a little focus and organization can make all the difference in the world. Follow the five best practices listed above and you’ll be well on your way.