The Perils of Personal Research

It's not unusual in the recruiting process for a candidate to balk at the company's initial salary offer.  Sometimes in their pushback, they might say that having conducted a bit of "research" they feel that their personal value, or perhaps the company's job pricing, should be greater than what is on the table.

How should a Manager respond?

Back in the day, before the advent of the internet companies were seldom challenged over how they priced their jobs.  The perceived value of a candidate's background and experience might be negotiated, and often was, but not the internal value of the position itself.   These days the wealth of information available online offers interested parties an opportunity to attempt their own investigation, to analyze or at least conjecture on what a company's job is supposedly worth in the real world.

What do you say when a candidate tells you that your $70,000 offer should be priced at $80,000?

What a Manager Should Know

If you haven't been hit with this scenario yet, consider yourself lucky.  But it will happen.  The challenge could even come from an existing employee, one who feels that they’re being undervalued for their responsibilities.

So how good is that "research" you've been told about?   Can you take it to the bank, or should it go to the garbage pile instead?  First of all, the online data sources most often quoted are frequently criticized as unreliable (inaccurate) and are seldom used by compensation professionals to base their program recommendations.  These sources often use data provided by the employees themselves, and without adequate filters to assure proper job matches.  Data collection techniques are often challenged by the critics.

Several referenced sources often tend to be self-serving, especially those sponsored by firms tied to the staffing industry.  Reporting higher salaries would benefit them in the form of higher fees.

These sources are also convenient and inexpensive, more reasons for their popularity.  But quality costs; you get what you pay for.   Here you get straight arithmetic, plain and simple.  The data cannot know the internal importance of a specific job within an organization.  It cannot interpret, cannot assign subjective values the way company decision-makers do when assigning a grade among peers, among like valued jobs.   Thus, it is easy to miss the mark by not understanding the company's job in terms of true market comparators.

So How Should the Manager Respond?

When the time comes, and you're exposed to this underpriced research tactic, step with care.  Your willingness to debate the issue hands at least a partial victory to the challenger, who will no doubt boast far and wide about their successful "strategy."  So, if you engage, be prepared for more of this negotiating tactic as word spreads.  Don't be put on the defensive.

You might consider several possible reactions.

• I didn't hear you:  As suggested above, you could ignore the gambit, refusing to engage in speculation, as discussing the matter gives a degree of credence to the challenger's viewpoint.  Simply state your confidence that the job has been properly priced - then drop it.
• The pushback: You could simply assure the candidate or employee that your company pays good money for compensation professionals to keep you abreast of the market.  You have confidence in your pay program and aren’t going to start a debate.
• Pushback II: You could challenge the "research", but that, of course, gives more credence to the point being made.  Likely you will not 'win" the argument, as whatever you say would be viewed with skepticism.
• I'll pass: You could skirt the issue and refer to HR, saying that you'll "have them take a look".  This fools no one, but it does give you the opportunity to move the conversation in a different direction.  Note: this will not work with an external candidate trying to negotiate.

Your reality is that the company has already determined the value of the subject job and will not welcome outside second opinions.  The job will have a grade, a salary range, and a midpoint - none of which will be changed because someone claims to have done a better job of "researching" how it should be valued.

I'd recommend the "I didn't hear you" response and be firm about it.

Btw, managers and executives have asked me which sources they should use to research the market value of the job they're interviewing for.  They're planning pushback tactics for reacting to an employment offer. 

Do they really think that the company is going to listen?

I tell them, "don't do it."  You could be risking whatever goodwill you’ve built up.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

Creative Commons image, "Dice," by Anders Eriksson

Comments

[Chris Dobyns]

This is one of my all-time favorite topics, only because I've had a "mixed experience" with it (Mixed = Positive or Negative), depending on my employer at the time.

On the question of the reliability/validity of non-traditional salary info sources, Chuck's "quality" observation speaks volumes. In lightly refuting these sources with candidates, especially with self-reported data, we have occasionally gone so far as to ask the candidate that when it comes to self-reported data and who volunteers that data - did they think it was individuals who were proud of the salary level they were earning, or the individuals who were ashamed? The resulting dead silence usually conveyed an understanding of why the information may be selective - and therefore skewed to the high side.

With regard to "responding", this is where it's good not to have full authority, and where it's nice to have recourse to a compensation specialist. Likewise, I've also seen used (successfully), the ability to negotiate up to a +5% maximum. After that, past approaches I've seen (used) are to state the unequivocal interest in the candidate, but to make clear that the offer is believed to be the correct balance between what the organization can afford and what the candidate should reasonably be willing to accept. After that, we always gave the 24 hour deadline for acceptance - after which we would move to our second candidate for the job (even if there wasn't one). That seemed to guarantee an acceptance (in the 23rd hour) in about 19 out of 20 instances.

[Charles Csizmar]

Good points, Chris. Thanks for adding to the conversation.