Qualifying Candidate Pay Rate
Money is a funny thing in our culture. In general people don't go around sharing with other people how much money they make or what they paid for their house or car. For most people, money is emotional. People have different feelings and attitudes toward money. You could it's even taboo to talk about money openly in the public. For these reasons, candidate interviews and specifically discussing salary compensation and pay rate history can become awkward if not executed properly. In this blog I’m going to share tips and best practices for qualifying candidate pay rate including training exercises you can adopt to improve your pay rate qualifying skills.
To be a good recruiter and certainly a top performer, IT recruiters must be comfortable discussing money. Recruiters have to learn to get comfortable asking their candidates direct questions about pay rate and salary history. Qualifying your candidate's pay rate and salary history is a key step in the IT recruitment process. The ability to qualifying your candidate's pay rate is the heart and soul of what it means to be a good recruiter. Recruiting is not just about sourcing, recruiting is about good salesmanship. Recruiters who are afraid to ask the pointed questions or push back and challenge their candidate on salary expectations are those who struggle with closing candidates.
Why Establishing Candidate Pay Rate History is Important
The ability to establish a fair pay rate or salary based on the candidate's pay rate or salary history is an absolute must have skill set for any recruiter. For recruiters, qualifying your candidate's pay rate ensures:
- Candidates don’t get overpaid or underpaid
- Client’s don’t over pay
- Recruiters get paid fairly
- There is room for candidates to receive increases upon promotion
- Candidates don't miss out on potential opportunities
- Clients don't miss out on potential candidates
Many recruiters struggle and even skip this aspect of the candidate interview and instead pay the candidate whatever he or she wants or “desires” to be paid. I hear recruiters far to often say to candidates “what are you looking to make?” That is it. The conversation ends there. This is NOT how to qualify your candidates pay rate or salary compensation. The other pitfall recruiters struggle with is they establish wishy-washy pay rate or salary terms. “Wishy-washy” salary or pay rate terms can be defined as the recruiter and/or the candidate having an unclear understanding and expectations on EXACTLY what the agreed upon pay rate is for the job. Candidates often think or assume they will be paid one rate while the recruiter thinks or assumes they will the candidate a different rate. This happens because recruiters fail to ask the tough, direct questions and they fail to confirm a specific pay rate with their candidate.
An example of wishy-washy terms is when a recruiter asks a candidate, “What are you looking to make?” and the candidate replies--without giving it much thought--“$65 an hour would be great.” The recruiter replies, “OK, great, I think I can do that.” The recruiter is failing to understand the candidate’s pay rate history and whether or not $65/hour is in alignment with his or her pay history. It’s also not clear if they have come to an official agreement of $65 per hour as a pay rate and that the candidate will be submitted to the client at that rate. Just because the candidate said, “$65 an hour would be great,” doesn’t mean they are verbally agreeing to it. It also doesn't imply the recruiter can pay that rate.
Another example of wishy-washy candidate pay rate terms when candidates responds by saying, “I’m looking to make somewhere between $50.00 and $60.00.” In this scenario, the recruiter presents the candidate to the client at $50.00, and the client offers the candidate the job at that rate, then the recruiter goes back to the candidate to extend the offer, but the candidate says, “I know I said I wanted to be paid between $50.00 and $60.00, but I really meant $60.00.” The recruiter is now stuck in a situation where they can’t deliver the candidate at the agreed upon rate, which means they either must:
- Absorb the additional costs, which may come out of their commission check
- Ask the client for money which they will not like nor will the sales rep
- Try to renegotiate with the candidate but that is the last thing you want to do at this stage
A third common scenario where recruiters get hung up with qualifying their candidate's pay rate is communicating through email. Relying on email for qualifying your candidate's pay rate history is a recipe for establishing wishy-wash pay rate expectations. Typically after the technical interview, the recruiter will send the candidate an email highlighting the details of the conversation. In the email, the recruiter will state what the job pays. The mistake here is the recruiter thinks by simply telling the candidate what the job pays that they have reached an agreement with the candidate. Simply telling a candidate what a job pays is NOT coming to an agreement on the pay rate. This does NOT imply that the candidate has agreed to those salary and pay rate tems.
It is extremely important that the recruiter establishes and maintains a specific salary/pay rate expectation with their candidates throughout the entire recruitment life cycle. In order to properly establish a fair pay rate, the recruiter must establish a pay rate/salary history with the candidate dating back three jobs or projects. The purpose is to establish a timeline that demonstrates how much a candidate was paid, and for how long and at what point in time he or she received a increase in pay. Establishing a salary or pay rate history also allows the recruiter to:
- Understand when, how much and how often a candidate received pay increases or decreases. This will allow the recruiter to understand if the candidate has historically been paid a fair market value or if he or she has been under or overpaid
- Offer a fair pay rate or salary to the candidate without overpaying the candidate and/or overcharging the customer (“leaving money on the table”). You don’t want to present your client with “candidate A” at a price point of $60/hour and “candidate B” at $55/hour and have the client tell you that candidate B is more qualified than candidate A. Why is candidate A more expensive? This won’t happen if you take the time to understand your candidate’s pay rate history.
- Better understand market rates for different skill sets and experience. This historical salary data is invaluable information for educating candidates and clients. This data can also serve as valuable information should we get into a salary negotiation with the candidate or client. The recruiter can use this data to educate the client and the candidate on market rates and value.
About Dan Fisher
Dan Fisher is founder and owner of Menemsha Group, a provider of sales enablement solutions dedicated to helping IT staffing firms improve win rates, shorten their sales cycle, and increase revenue per sales rep. Since launching Menemsha Group in 2008, Dan has consulted with over 200 IT staffing firms and has invested over 5000 hours coaching IT staffing sales reps. He’s authored is his own proprietary sales methodology and has previously spoken at Staffing World, TechServe Alliance and Bullhorn Live 2012. Prior to launching Menemsha Group, Dan spent 16 years in the IT industry running local, regional and national sales teams. Dan worked for Kelly Services, Oracle Corporation and Alliance Consulting. Dan currently resides in Boston, Ma.