The Compensation Questions You Can’t Afford to Skip

I decline great candidates for 99 problems.
compensation-jeff-hyman
But compensation ain’t one.

That’s why I’m often surprised when people say, “I found a great candidate but can’t afford them.”

Quite often, you can… If you ask the right questions.

For starters, I discuss comp on the very first call.

Who has time to fall in love with a candidate, go all the way thru the process, get to the offer stage only to find out that candidate is far above your budget?

So the question to ask on the first call is, “Would it be ok if we talk about comp, just to get that out of the way?”

Surprisingly, 90% of candidates say, “Sure” and then they proceed to spill their guts.

If the candidate doesn’t share the numbers, follow-up with, “Great. How’s your comp currently structured?”

Ninety percent of those remaining 10% will proceed to tell your their current comp. Viola!

The goal is not to turn the first phone screen into a negotiation. It’s simply to get a sense of whether you’re in the same ballpark.

Now, you’ll sometimes feel sticker shock when the candidate tells you their comp.

That’s a good time to remind yourself that they’re speaking with you. So they likely have some other frustration with their current situation. Your goal is to figure out what that is. So ask “What’s missing or frustrating you most at __?” Really dig. Remember: people don’t move primarily for comp reasons.

Far more often, top-performers are stifled, bored, and frustrated by their micro-manager.

But, let’s go back to comp.

When the candidate tells you “I’m currently at $100K base + 60% bonus + equity,” you’ve got some clarifying to do:

  • What is the bonus based on? How’s it actually calculated? Is it 100% in your control or is it based on the company’s performance? Or some other black box? How often is it paid out? When is your next payout timing? (Useful information if the candidate is worth waiting 2 months for.)
  • How much of that 60% potential has actually been paying out? What’s been the payout the past couple of years? (Often you’ll hear “Oh, well, um, last year, it was about 20%.” All of a sudden, that candidate is far more affordable.)
  • And the equity… how much of that is vested versus unvested? They’ve been with the company for three years, which means the unvested portion is only 25% of the total. So they’re not really leaving that much on the table if they make a move.
  • Also, I ask their assessment of the likely value of that equity. Often, it’s so far underwater, it would be more valuable as paper to line a birdcage. So that 2% equity stake they hold (relative to the 1% you’re prepared to offer) is meaningless. It’s up to you to educate the candidate. Don’t assume they know.

Without these answers, you can’t possibly compare apples to apples. Nor can you explain to the candidate why this role might be more lucrative than their current one.

The point is, don’t assume the candidate isn’t affordable until you do some digging.

Never settle,
Jeff



Jeff Hyman

Jeff Hyman

Jeff Hyman is the author of Recruit Rockstars: The 10 Step Playbook to Find the Winners and Ignite Your Business. The Chief Talent Officer at Chicago-based Strong Suit Executive Search, Hyman currently teaches the MBA course on recruiting at Northwestern University’s Kellogg School of Management and hosts the five-star Strong Suit Podcast. Jeff has been featured by Inc., Fortune, Forbes, The Wall Street Journal, CNBC, Bloomberg, and other media outlets. Learn more at www.recruitrockstars.com

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