Recruiting? How Much Base Pay Do You Need to Offer?

Do we exaggerate the role that compensation plays in the decision to take a job?

In case you’ve never run into the question before, I assure you it is a decision some companies need to make — and they should rejoice in finding themselves in this situation.

Gallup called their recent megasurvey report, “Do Employees Want What Your Workplace Is Selling?” It’s a great question for all of us to ask and it’s a very useful report. One thing they asked is what employees take into account when deciding to accept a job offer — with interesting results:

  1. The ability to do what they do best
  2. Greater work-life balance and better personal well-being
  3. Greater stability and job security
  4. A significant increase in income
  5. The opportunity to work for a company with a great brand or reputation

Before you react to the ranking that compensation was given, recognize that another find was that, ‘41% of employees say a significant increase in income is “very important” to them when considering a new job.’ Admit it, though, isn’t that lower than you expected?

If employers need to bring much more than pay to the table, imagine what it would be like to be the company in your industry that gave employees:

  1. The ability to do what they do best
  2. Greater work-life balance and better personal well-being
  3. Greater stability and job securing
  4. A significant moderate increase in income
  5. The opportunity to work for a company with a (well-recognized) great brand or reputation

When few companies can guarantee a reliable mix of numbers 1, 2, 3, and 5 — but your company can — is it reasonable strategy to put less emphasis on pay, believing that the talent that you want will be attracted by the unique opportunity to experience your company’s other qualities? Or, should your company also stick with the typical game plan of offering a significant compensation increase?

The Harvard Business Review describes four kinds of workplaces to help people think through a job search: The company as community; the company as a constellation of stars; not just a company, a cause; and, small is beautiful. They advise people to realize that:

“What matters at work is whether the value proposition that drives your company is in sync with the values that motivate you, whether the culture that defines life inside an organization is compatible with your personal style, and whether the people with whom you work make you think, grow, even laugh.”

Don’t we often pay people more to put up with — or help your company make the most of — a situation where employees have to wait and hope they’ll have a chance to do what they do best, where work-life balance keeps them on the brink of undermining their well-being? Of course those tend to be the “constellation of stars” companies, which are far more common than the other three types.

I think it would be very interesting to have insight/research on compensation in those companies that actually deliver on their value proposition. Do you any insights to share?

Margaret O’Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.

This post originally appeared on Compensation Cafe
Author: Margaret O’Hanlon