In just the last few weeks I’ve had two instances where a “sure placement” was derailed due to low-ball offers from the prospective employers. Despite clearly illustrating the candidates’ current remuneration and their expectations, all aligned to market and their value, the clients chose to low-ball.
Effectively, they chose to extend offers than simply amounted to a 10% increase on the candidates’ current remuneration. As was to be expected, particularly with candidates who are in high demand and short supply, the offer was summarily rejected and the candidates chose to withdraw their consideration, opting to rather stay at their current employers.
Shift in Negotiating Power
We’re all aware that the negotiating power has shifted, especially in a market where the best candidates are already employed and where those who are open to considering alternatives have options. As recruiters, much of our job revolves around our ability to sell the client and the opportunity to convince these individuals to meet a prospective employer. We do this, successfully facilitating the interview process.
It seems that perhaps the wheels come off here, when during the interview the client begins to believe that the candidate is really interested in the role and that they have re-assumed the driving seat in the negotiation. As all good recruiters know, despite tangible interest from the candidate, the best candidates, especially those bordering on “unicorn” or “purple squirrel” status, retain the negotiation power.
In today’s market those with the required skill / education / experience have choice.
What a low-ball offer tells the Candidate
Low-ball offers, essentially anything that isn’t near to the remuneration amount indicated by the recruiter, as agreed with the candidate, at the outset of the process, are bad for everyone. Most of all for the client who inevitably ends up losing any hope of employing the talent now, and into the future.
Here’s what Low-ball offers do to the Candidate:
1. Insult them
An offer, usually only equivalent to what they’re inevitably going to receive at their next review, is insulting. Wouldn’t you be insulted? Especially if you’ve had an in-depth discussion with your recruiter who has confirmed the remuneration parameters at the client and established your market value.
2. Create an uncomfortable situation
Very few people enjoy negotiating and in a pre-employment situation this is even more awkward. Most candidates would rather turn down the offer outright, especially if they feel insulted, than begin a negotiated exchange. It is also very uncomfortable for the candidate-recruiter relationship as the candidate inevitably feels that the recruiter has not done his/her job properly.
3. Make a counter-offer more attractive
After all, the client has made very easy for the current employer to better the offer. Even a marginal increase on the low-ball offer will be immensely more attractive for the candidate. In one of my recent examples, the candidate didn’t even have to switch chairs, never mind company, to secure an R800k per year increase!
4. Create a negative impression of the brand
Talent Brand is critical in today’s highly competitive market. The loss of goodwill created by a low-ball offer will not only impact this candidate but has the prospect of tainting the opinion of other prospective candidates into the future. The digitally connected world is very small and word gets out fast. Companies that typically make low-ball offers become “known” and I personally have experienced prospective candidates saying no to any potential discussions about opportunities with these organisations.
So what risks does the organisation face?
1. Brand Damage
The most obvious risk is to the company’s talent brand but it extends to their overall business brand as many surveys show that a candidate’s experience not only impacts their employment decisions but potentially deters them from utilising the products/services of that company as well.
2. Shortage of Talent
If the best people available are unwilling to consider working for the company, the organisation stands to lose in the high stakes war for talent. The pool of candidates becomes noticeably smaller and the organisation will need to re-evaluate their practices if they want to attract and retain the talent necessary for business success.
3. Misaligned EVP
Sadly, there also seems to be a misalignment between the Employee Value Proposition (EVP) and how the client and candidate perceive this. In my experience, some of the worst offenders of making low-ball offers have a poor – or even non-existent EVP and this puts them in an even poorer position to attract talent.
This is particularly true of start-ups. In a start-up, the perceived risk to the candidate is high and unless the company can offer a VERY strong remuneration package to make this move more attractive, they’re not likely to consider the role. For most start-ups, there is no real EVP in place, as this typically takes time. For these companies, the best talent can make the difference between surviving and thriving and so it is counter-intuitive to low-ball these critical in-demand individuals.
Most recently, I experienced this first-hand when a start-up client chose to low-ball a very experienced data specialist. In the big scheme of things, the difference between what the candidate wanted and what they offered was small, but it was big enough to put the candidate off, making them choose to remove themself from the process. In this case the candidate was in the middle of their career and the risk associated with moving to a start-up in a volatile economy was simply not viable, especially if the remuneration on offer was not significantly lucrative to make them think twice. Most frustrating was that this start-up has been around a few years and has a holding part partner that is cash flush and could well afford to make the right offer….. penny wise pound foolish?
Those hiring in the new talent reality in which we operate do themselves no favours by low-balling when they don’t have the brand / EVP / loyalty and security of succession to counter-balance the risk equation running through the candidates’ minds.
Low-ball offers very rarely – if ever – succeed in being accepted so I’d like to beg the question, why? Why make them at all? What does this achieve? The result is a poor candidate experience, wasted time for everyone and inevitable damage to the employer’s brand.
As a professional recruiter, I am bound to educate my clients about the dangers of practicing this strategy and even reconsidering working with them at all. It is my job to understand my client’s requirements, to advise them on their chances of securing the talent they seek and to source this talent. The hard part of my job then begins. Convincing the talent that the opportunity I have available is better than their current one and negotiating their consideration of the option. It makes zero sense to do all this work when my advice as a recruiter is undermined by a low-ball offer. I, like many of my recruiter colleagues, are choosing not to work with clients who do this because there is never a happy ending.