Top dollar doesn’t equal top talent
Written by Amanda So
Published on September 24, 2019
Reading time 5 minutes
Salary negotiation: it’s a common practice that comes with recruiting and hiring the best talent available. A quick Google search yields thousands of articles offering candidates negotiation best practices and recruiters are constantly re-evaluating their compensation packages against the industry standard.
In the race to hire the cream of the crop, it’s becoming common practice for companies like Netflix pay their employees 25-50% more than competitors. But just because you pay the most doesn’t mean your top talent is sticking around for the long haul—or is the right fit for your organization. At some of the highest paying tech companies, the average retention rate for employees sits squarely between 1.5-2 years, and reasons for leaving vary from poor management to excessive pressure on the job.
The reality is that if employers continue to prioritize salary over a holistic compensation package and positive employee experience, they will struggle to build an environment that both attracts high performers and encourages those candidates to stay for the long run. Getting caught up in the cyclical war of paying more than the other guys won’t always guarantee high retention rates or sustained productivity. Rather than focus only on the dollars and cents, companies that want to attract and keep their top talent need to build their compensation strategy around their culture.
Sometimes less is more
In 2015, Vanita Lee-Tatum was a vice president with a highly lucrative banking career when she suddenly gave it up for painting, a job that paid barely one-third of her previous salary. Among other personal reasons, the former banker cited burn out and feelings of emptiness that prompted her to make such a dramatic career change.
Stories like Lee-Tatum’s are more common than people think. On the surface, taking a massive pay cut feels counterintuitive—why would someone sacrifice something like financial stability and a retirement plan for a career filled with uncertainty? A closer look might reveal that some companies offer high paychecks in order to compensate for things like a toxic work environment, exclusive policies and a poor work-life balance. Money can make up for a lot of things, but it can’t buy happiness or a stable work-life balance, all factors that influence an individual’s well-being and productivity.
While money may have been the primary motivator for job hunters several years ago, the reality is today’s candidates crave more than a hefty paycheck. Intangible benefits like workplace flexibility and strong company values carry as much weight as an additional $5,000 a year, and 60% of employees are willing to take pay cuts if it means working for an empathetic organization. As people’s work lives and personal lives become more intertwined, the need for a workplace where employees can be themselves and feel fulfilled in their work becomes more pronounced.
The paycheck is a small piece of the larger compensation package employers should be pitching to top talent. That nine out of 10 employees are willing to trade a portion of their lifetime earnings in exchange for greater meaning at work suggests people are driven by more than a dollar amount. When asked what inspires them most at work, the majority of employees cited the nature of the work itself and the opportunity to learn and grow as the top motivating factors. What really appeals to high performers like Lee-Tatum are opportunities for employees to grow their careers and to feel like their work truly makes a difference in their organization.
The magnetic pull of a strong culture
Talented people want to work at companies that not only make the best use of their skills and abilities, but also provide things like feelings of pride, a sense of accomplishment and positive workplace relationships.
It’s important here to distinguish that perks and culture are not the same thing—free lunch is great, but it doesn’t directly contribute to an individual’s long-term well-being. Perks are ephemeral; they’re great at providing short bursts of motivation but it’s the culture that tells job seekers about a company’s values and expectations.
A strong corporate culture should fuel job satisfaction and, when properly cultivated, can help recruiters pinpoint which high performing candidates are the most likely to succeed in their workplace. Culture creates an environment where people want to work and turns existing employees into vocal advocates willing to speak convincingly about why a company is better than another. And it strengthens employee engagement and positively impacts an organization’s retention rate, ensuring your top talent sticks around for years to come.
In order to build a magnetic culture, employers should have regular conversations with their current workforce to gain a better sense of what makes their organization great. When recruiting for a marketing position, for example, ask your current team members how they would describe the working environment and the camaraderie they share with their colleagues. What motivates your marketers to do their best work every day? What matters most to them about working for your company? Or, is there a culture gap your team is hoping to fill with the addition of a new hire? This open line of communication with employees gives recruiters a better idea of who will thrive in their company’s culture and which candidates to pass on.
Transparency helps seal the deal
At the end of the day, employers still need to provide a competitive salary as part of their overall compensation package to attract the best of the best. After all, job seekers have more information than before about compensation and research shows 39% of workers negotiated their salary during their most recent job offer.
To keep top talent interested, be transparent about how you structure individual compensation packages. At Sprout Social, for example, the offer letter we share with new hires includes a breakdown of our company’s values, a detailed guide to our benefits and a short primer on the various growth opportunities afforded employees in addition to their starting salary. Every candidate brought into our office not only talks with their potential manager, but also gets an opportunity to chat with their peers to gain a better feel for our culture. And Sprout interviewers get a chance to learn more about each candidate’s personal and professional long-term goals and interests. These intangibles, while they lack a monetary value, contribute to an employee’s long-term well-being and help job seekers evaluate if a company is the right fit.
That said, some individuals will only focus on salary—and that could be an indicator that your company is not the right fit for that person. No matter how talented or experienced an individual is, someone motivated primarily by money won’t hesitate to jump ship to a competitor that pays more. Every company wants to hire the best of the best, but you may end up sacrificing your company’s values and culture for someone always searching for the next best thing.
A better way to find (and hire) the right fit
Attracting and retaining top talent in an already scarce market starts with a holistic compensation package that strikes the right balance between pay, benefits and culture. Money aside, the best candidates on the market are looking for companies where they are recognized for their work, share the same values as their employer and enjoy coming to work every day.
Employers need to get out of the mindset that recruiting top talent is only attainable by paying top dollar. By putting culture at the center of your closing strategy, you stand a better chance of not only attracting the strongest candidates but also keeping them away from your competitors. So invest your employees, build a culture people want to be a part of and don’t worry too much about the money. The end results may just surprise you.
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