As a result of this competition, businesses were finding it increasingly difficult to recruit and retain the staff they needed to succeed, and wages were rising sharply as a result. In fact, the ONS reported that annual growth for regular pay (excluding bonuses) from May to July 2023 was 7.8%, the joint-highest increase since comparable records began in 2001.
Today, many businesses are still being priced out of moves for hires capable of improving their prospects. To help our members address that issue, we’re revisiting the advice Matt Schwartz, Partner at our friends, H.I. Executive Consulting, presented in his article, ‘Fighting the Wage War in 2022’.
Despite Matt’s article being published in December 2021, it remains extremely relevant to the situation businesses find themselves in, today. Matt explained that high base wages would likely be just the tip of the iceberg going forward, citing evolved bonus models and ‘aggressive stock plans’ as the other challenges at play. He claimed that many businesses would therefore be surprised when recruiting, with coveted candidates likely to cost significantly more than originally anticipated.
“So, how can you still compete”, Matt asked, “even if you can’t really afford the aggressive long-term incentives that are becoming expected?” Well, he claimed that there are really only two options when the candidate you want is going to cost more than you expected.
1. Focus on potential rather than experience
“You can be realistic about your company’s financial constraints and look at up-and-coming candidates who may or may not have the leadership experience you seek”, Matt wrote. “This may not be ideal and will mean revising your expectations, but remember the real definition of an A-Player: The best of what is available at a price you’re willing to pay (Geoffrey Smart, Topgrading).”
2. Break your expected compensation parameters
“You can go outside your expected compensation parameters to secure the right person”, Matt explained, “and this is the route to go if you really want the best.” Getting creative with your own compensation models – by offering larger bonuses or stock options, for example – is one way to facilitate this process, but if this option is your preference, Matt added that you must consider other factors.
“Firstly, you must be prepared to convince your internal stakeholders that the candidate is worth the package you’re suggesting”, he shared. “Secondly, take a long-term view of the candidate and assess whether they can do more for your organisation as they grow and are promoted. Can you justify the cost of acquiring them? And finally, consider how offering one person an outsized compensation package will affect parity within your team. Are others going to ask for a raise?”
To help you decide on the best course of action when it comes to sourcing the best talent, it is always helpful to speak to a recruitment expert. Should you wish to do so, please don’t hesitate to contact us via email@example.com so we can put you in touch with our partners at H.I.E.C.