Dr John Sullivan Talent Management Thought Leadership

This action piece… is a scannable list of alternatives to raising employee pay during high inflation. 

This article covers a list of compensation selling approaches. They are designed to minimize potential applicants’ fear about whether the compensation in their new job will allow them to maintain their current living standards during inflation. These corporate alternatives to increasing pay are essential because pay concerns are now a top issue among both applicants and employees. Potential applicants are already focused on jobs with better compensation, benefits coverage/costs, and lower commute costs. And unfortunately, our current record-high inflation and gas prices are predicted to be with us for at least the rest of this year. 

Don’t assume the only effective inflation countering action is the immensely expensive raise in pay. Managers and smart recruiting leaders need to be educated on ways to convince potential applicants to apply for and eventually accept lower offers. Therefore, the focus of this article is highlighting dozens of these successful no-cost approaches that can effectively counter an applicant’s concerns about whether the compensation for this new job will allow them to stay ahead of continually rising inflation.

My Comprehensive List Of Low-Cost Actions For Countering Applicant Concerns About Your Low Base Pay 

You can offset the negative impacts of inflation and high gas prices by proactively modifying your recruiting and offer processes with a few of these 30+ different, low, or no-cost counter-inflation actions. Of course, you should only consider the actions that fit your company’s situation, policies, and culture. These multiple action items are divided into eight distinct categories, with the most impactful actions listed first under each category. The first category of action items covers selling points that should be applied during recruiting.

Recruiting Process Selling Points To Consider 

To alleviate potential applicant fears related to their perception of receiving a low base pay, consider adding these inflation countering selling points to your recruiting process.

• First, make it a goal to maintain a competitive advantage around compensation offerings – begin the process by making, building, and maintaining a competitive advantage under high inflation as a priority goal. Therefore, the goal is not just to do a better job selling your compensation offerings. But instead, it is to stand out among all your recruiting competitors. As part of that goal, start by making it a priority to convincingly show potential applicants and candidates that your compensation offerings are superior to other applicant competitor firms. To ensure that your approach is clearly superior, have an unbiased market research team gather comparable publicly available information on the top firms. And then pretest them by comparing them side-by-side to determine which total anti-inflation compensation approach is superior. Also, consider asking a sample of recent new hires to review and critically assess your “total compensation opportunity” approach. 
• Especially when hiring for lower-paying jobs, ramp up your compensation sales approach – inflation impacts every applicant. It’s important to realize that an applicant’s concern over insufficient pay will be much greater for those applying to your lower-paying jobs. These applicants are likely already living on the edge. As a result, you should educate your recruiters and hiring managers to increase their emphasis on your compensation sales factors for hourly jobs and those jobs where applicants have expressed increased concern about low compensation.
• Use candidate research to identify if compensation is among their key attraction factors – it’s important to accurately identify “the primary attraction factors” for potential applicants for each of your job families. By surveying potential and current applicants to identify their ranked “job attraction factors.” And then emphasize those top-ranked factors in your recruitment marketing materials and during interviews. However, also realize that it is necessary to go to the next step and further personalize your selling approach to each top candidate. So, determine an individual top candidate’s specific attraction factors by asking them directly at the beginning of their interview process to list their specific ranked “job acceptance criteria.” And if compensation concerns are ranked near the top, tailor your compensation selling approach to them throughout their interview and offer process.
• Make potential applicants aware of company/industry growth rates – even if your company doesn’t currently have great compensation. Some candidates will be less concerned about the issue if they know that your company and the industry are growing rapidly. Many will equate rapid growth with increased compensation and above-average promotional opportunities. In your recruiting materials and throughout your selling approach, include reasonable estimates of your company’s and your industry’s future growth rates.
• Conduct “candidate exit interviews” with former top candidates to see if compensation was perceived as a primary negative factor – it’s critical that you know precisely why any of your top candidates have either dropped out of your interview process or rejected your job offer. Survey these “lost candidates” using an online exit interview with at least a sample set. Then use that captured information to determine the specific areas (including compensation) where your selling approach must be modified.
• Update your employer branding materials – the most effective employer branding approaches are the ones that cover areas that are currently considered to be the most important among potential applicants. However, in today’s volatile talent environment, you must continually update your employer branding materials. Emphasize your company’s performance on inflation and commuting-related concerns. It’s also a good time to remind potential applicants about your company ratings related to compensation on glassdoor.com and whether your company has made it on any of the “best place to work” lists.
• Sculpt your offers so that they address this applicant’s particular expectations – once you decide to make an offer to a specific finalist. The offer must be tailored to fit their specified “job acceptance criteria.” Next, use those previously disclosed criteria as a checklist for sculpting your offer and selling approach in the offer development process. And if you’re bold, pretest an outline of your offer with the candidate to ensure that you didn’t omit any critical selling point or concern in that offer. And if you want to increase your acceptance rate even higher, present your final retested offer to them in person (because it’s harder to say no in person). Also, use a “total compensation opportunity” approach to your discussions around pay.

The Best Recruiting Sources To Use During High Inflation 

It’s important to identify the recruiting sources that produce candidates less likely to pass on you because of your perceived compensation levels.

• Emphasize employee referrals because employees are your most convincing sellers – realize that even if your updated approaches for selling potential applicants on your compensation are effective. Realize that your employees are the most effective individuals for selling potential applicants. They are more credible and “live the job” daily. So, reemphasize their key role in finding and selling top prospects during their referral efforts to your employees. Also, provide your employees with specific proven arguments that they can use to overcome any resistance in candidates that are concerned about your compensation. Also, consider offering a “FAQ website” where your employees and recruiters can directly answer potential applicant questions about how your company effectively shields employees from inflation worries.
• Emphasize boomerang rehires – re-recruiting your departed employees who didn’t leave for money is an extremely powerful recruiting source. They are already knowledgeable and comfortable with your compensation practices.
• Target the lowest-paying companies – because moving from a low-paying company to an average-paying one will, in most cases, effectively get a top candidate a raise. Start by making a list of your recruiting competitors who routinely pay below you. And encourage your recruiters and your employees to target the best employees at these firms. 

Show That You Have Better Opportunities To Get Promoted And Earn More

Whether your initial base compensation is viewed as adequate or not. It makes sense to show potential applicants that your new hires also have more opportunities to be promoted relatively quickly into better-paying jobs. 

• Upskilling is common, leading to more pay – demonstrate to potential applicants that your company offers an above-average number of opportunities for a new hire to upskill themselves. Either through your formal development programs or faster internal movement. And with these added skills and capabilities, their initial pay will continue to increase.
• Highlight the above-average promotional opportunities within this job family – in addition to developing new skills quickly. Show potential applicants that your company offers above-average opportunities to get promoted. And with these faster promotions, new hires can raise their compensation relatively quickly. Also, consider giving one or two examples of recent new hires that were actually promoted quickly. 
• Emphasize frequent leadership development opportunities – if your company has an excellent leadership development program. Highlight it in your recruiting materials and during interviews. So those exceptional candidates with a steep career trajectory and developing leadership capabilities know they will likely get promoted rapidly into a much better-paying leadership role.

Convince Potential Applicants that There Are Multiple Ways to Improve Their Compensation

Without changing their base pay. Make it clear to potential applicants that there are many ways that new hires can increase their total compensation.

• Make it easy to learn the compensation range for each job – many applicants will automatically assume that when you don’t disclose the pay range for a job, you are not revealing it because it is noncompetitive. So, if you can’t reveal the pay range within your job postings, go to the next step and make it easy for a potential applicant to discover the job’s pay range on a company website.
• Show that stock/bonus/OT opportunities will significantly supplement their base pay – it makes sense to show potential applicants that they can easily increase their base compensation due to the incentives accompanying this open job. The most obvious area for added compensation in most companies is stock options or grants. So if this is the case for this job, show in your recruitment marketing materials the amount of money that these options can earn an average employee. Also, show that some employees in this job routinely add significant extra compensation through job-related performance bonuses or from readily available overtime work.
• Show that your extensive benefits coverage will save them money – many potential applicants, especially those with large families, will be concerned about your benefits and their compensation. So it makes sense to disclose to applicants the amount of money they will save as a result of your broad benefits package. Your benefits cover many areas that others don’t. And that your co-pays or deductions are superior to those of other firms.
• Show that their pay will be high relative to their cost of living – demonstrate that the open job is located in a low-cost-of-living area. And then cite that geographic area’s low CPI. Also, provide an example of how their pay will have “X percent higher purchasing power in this geographic area.” And where possible, alternatively make the job 100% remote so that the new hire can choose on their own to live in a low-cost of living area.
• Show that your employees are satisfied with their compensation – many applicants will be relieved if you can show them that your current employees are highly satisfied with your compensation. As part of your recruiting and branding marketing materials, list your employee survey results that show a high level of employee satisfaction with your company’s compensation and benefits. Also, if you can find them, consider adding positive compensation quotes from employer comments sites like Glassdoor.com and Indeed.com. In addition, actively encourage your employees to periodically post positive quotes about their pay on these and their social media sites.
• Raise the compensation range for the job – it may seem like a little thing. However, it’s a fact that most applicants will immediately move on once they realize that their current compensation doesn’t fit within the published top pay range for this job. To prevent this immediate abandonment, it makes sense to purposely expand the pay limit at the top end of your range. The “possibility” of getting more money alone might keep the applicant interested in your job for a while. And even if that higher range isn’t easily achievable. This “higher pay possibility will give your recruiters more time to convince the applicant that the other aspects of the job make it worthy of continued consideration.
• Show that your pay percentile is above average – in some cases, you can partially lower an applicant’s compensation concerns. Simply make it clear to them that your company’s overall pay percentile is higher than the industry average.
• Reveal how frequently your company re-examines pay – when potential applicants know that your company has a standard practice of frequently updating its employee base pay scales. An applicant will likely remain interested in your job for a longer time. So whenever this is true, make it clear that your company raises its pay levels much more often than competitor firms.

Minimizing Applicant Concerns About Record Gas Prices

In addition to standard inflation, today’s record-high gas prices are a primary concern among many potential applicants. So it makes sense to proactively make potential applicants fully aware of company practices that proactively reduce employee commute costs (as well as productivity problems caused by a painful commute). Even before gas prices skyrocketed, research by Jeff Parks discovered that one manufacturer found that if the employee commute was more than “13 miles, (which is about a 30-45 minute commute), the probability of quitting jumped to more than 92%”.

• Highlight your short commute – if your facility is located close to where most potential applicants live. Make them aware of the low commuting costs and times they will have in this job.
• Emphasize your mass transit benefits – if you offer company-sponsored commuting support, including company-sponsored employee vans/buses, ridesharing, or reduced-cost transit passes. Emphasize those features in your recruitment messaging. And if your work facility is close to a transit rail stop, highlight that benefit.
• Reveal your actions for reducing the number of commute days – because having a reduced workweek will cut employee commuting costs. Make potential applicants aware of whether this job allows for remote work or a 4-day come to the office workweek. 
• Be aware that increased commute costs may reduce diversity – because research has shown that high commute time and costs negatively impact your low-income employees. Make your executives aware that actions that make commuting less painful and costly will likely help you maintain or even increase the diversity at your company.

Learn When Compensation Issues Are A Major Cause Of Employee Turnover

Because raising pay levels are extremely expensive and often not even possible. Your executives must know whether your low pay practices partly cause employee turnover. 

• Conduct (why do you) stay interviews to identify future turnover issues – consider regularly conducting stay interviews with your top at-risk employees. Design it in a way to help you identify issues (including compensation) that may lead to top employee turnover in the future. 
• Use delayed post-exit interviews to identify actual turnover causes – because most exit interviews don’t produce genuine answers covering turnover causes. Consider using delayed post-exit interviews that occur months after a key employee departs and when ex-employees are more likely to be totally candid. Determine if either compensation or commute issues were a primary cause for the employee leaving.

Also, Consider These Additional Miscellaneous Cost Factors

• Calculate the ROI of paying more money versus losing your best – because of the lingering talent shortage and the likelihood of high inflation over the long term. HR leaders should work with the COO to determine where your low pay practices may not be saving you money after all. Check if your pay practices are causing you to lose multiple top candidates and top current employees (that add great value). Research may reveal that actual dollar costs from these losses may be significantly higher than the costs of simply raising employee base pay in some job families.
• Calculate the negative impact of low pay on increasing unionization – executives need to realize that one of the primary reasons employees join a union is to get increased compensation. Calculate the cost-saving produced by low compensation and compare it to the costs of being burdened with a new or a much stronger union.
• Consider avoiding multiple talent issues by replacing employees with robots – recruiting should take a strategic perspective. And that means that with each open job, recruiting should work with the hiring manager to determine whether the work could instead be done just as well by robots or productivity software. Neither work alternative is impacted by the top three current talent problems – inflation, labor shortages, and high gas prices.

If you can only do one thing – it should be to find out if your low base compensation is actually reducing your number of applicants. Do that by testing your compensation arguments on a small sample of potential applicants, top candidates, and recent hires. Start by presenting them with a written outline of your arguments supporting your current compensation practices. And then track the percentage of those surveyed who consider those arguments powerful enough to alleviate most of their compensation concerns. If more than 40% of those surveyed consider your arguments insufficient, revise them and retest them to ensure that your results improve.

Final Thoughts

When record inflation is causing compensation to become a major issue for potential applicants and employees, it is important to resist the typical knee-jerk reaction, assuming that the only effective action is to raise employee pay. And instead, first, try an alternative data-driven approach. In practice, there are many other low or no-cost ways to get potential applicants to view your current job openings more positively, regardless of their compensation level. The key to success is to try a few for a sample of job openings and to use metrics to determine if they positively impact applications, candidate dropout rates, offer acceptance rates, and the on-the-job performance of new hires.

Author’s Note 

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Dr. John Sullivan 6/20/22 for the DJS Aggressive Recruiting Newsletter