Money money money. Famed writer Leo Rosten once said that money can’t buy happiness, but neither can poverty. Money is at the forefront of everyone’s mind. With the state of the current economy, it’s more important than ever. Working for a company that you love or in a job that you are passionate about are luxuries that are becoming rare. In this day and age, making as much as possible and putting food on the table is the key to survival.
Layoffs and eliminations are forcing some people to take salary cuts. Placing an ad for an open position brings in more applications than ever before, most of which are looking for a job, not necessarily the job you are offering. With so many factors working against you when looking for the perfect fit to fill that open spot, when that candidate is found, how can you as an employer increase the probability that the offer will be accepted, as well as the probability of long-term retention? The short answer: MONEY.
Let’s say you are hiring for a position with a salary range of 40k to 50k per year. If the top candidate you’ve interviewed has a requirement of 51k, is it not worth a measly 1k per year to secure them? Especially if the applicant knows the top of your range is 50k, offering 51k will let them know how much you want to bring them onboard and may provide motivation as a new employee to work hard to earn that extra salary. This is a great strategy assuming this doesn’t mean bringing someone on amongst others in similar capacities that make significantly lower salaries. Hiring one great employee might not be worth lowering the morale of an entire team of workers.
Chief Executive Eric Schmidt disclosed the raise in an email to employees, saying the company wants to lift morale. “We want to make sure that you feel rewarded for your hard work,” Mr. Schmidt wrote. “We want to continue to attract the best people to Google.”
In a recession, they are giving 10% across the board. That says something about the opinion Google holds about what drives the happiness (and loyalty) of their employees.
Workers leave every day for offers of more money with other companies (many times competitor companies). If you have a top performer inform you of another offer they’ve received, how do you handle it? Do you counter? Do you try to offer other perks to keep them on board?
First of all, it should depend on how much of an increase you are talking about. At a certain point, depending on the position the key player holds, it may not make business sense to match an offer exorbitantly higher than the current salary. Secondly, you have to take a look at the position being offered. Is it a lateral move or a promotion? If you have a promotional opportunity internally, you may be able to keep the employee on at a lesser salary than they were offered by giving them an advancement opportunity. Lastly, is the star performer easily replaceable? Even if Jane Doe is the best customer service representative that you currently have, if there are two or three other high potentials beneath her, it may not make sense to give Jane a large pay bump. You will keep her on only to eventually lose the high potentials once they catch wind of Jane’s salary increase.
Regardless of your hiring and retention situation, understanding that people respond positively to money is important. Keeping in mind that generally employees who are happy are less likely to look for other employment, if and when they find something else, you should already have a well thought out HR process for determining how to respond.
Traci K. is an HR Professional and freelance writer based in the Midwest, specializing in recruitment and immigration. When she’s not improving unemployment, she keeps busy with her husband and four children.