Recruitment is expensive. Not only do hiring managers have to find the time to prepare the role profile and manage workloads during a vacancy, but the interview process is especially resource intensive. This is exacerbated when, at the point of salary discussions, it becomes apparent that the candidate and the organisation have two alarmingly different ideas when it comes to pay.
University graduates and young people entering their first real employment this year are finding a brave new world – one where some employers are desperate to live by old rules, but others believe the rule book has been torn in two. A starting salary has the potential to affect your income for the rest of your life and can have a significant impact on later choices available to you, including the size of your pension pot, your lifestyle and of course your career prospects. It is important, therefore, for young people to enter the workplace equipped not only with the skills and knowledge that their education has provided them, but also with the empowerment that skills in negotiation can bring.
Art of negotiation
The UK curriculum for schoolchildren is finally including basic financial literacy as part of the curriculum, meaning that tomorrow’s school leavers won’t be as helpless around money as yesterday’s. But there is scope to take things further. If university students and school leavers were given the opportunity to attend salary workshops and were practised at the art and science of negotiation, then by the time they sit down for their first job interview, questions about salary expectations wouldn’t get palms sweating in quite the same way. This could make millions of dollars of difference over the course of a long career. This is not automatically bad news for business owners, either; indeed, the end goal of a successful negotiation is a win-win for both parties.
Staff and employers all know that valuing workers goes beyond a pay cheque
Gravity Payments in Seattle in the US made headlines around the world in 2015 when its CEO Dan Price took some stark feedback from a colleague about the enormity of his own pay cheque compared to the salary offered to his lowest paid staff. Price decided to take a million-dollar reduction in his own pay in order to give every member of staff in the company a minimum salary of $70,000 – the amount that research via a Gallup World Poll shows is the ‘ceiling’ past which money can’t buy you happiness. An income of $70,000 allows you to live in a decent house in a nice area, have certain lifestyle expenses like a reliable vehicle and be able to save for children’s education while still having a couple of holidays a year and so on.
Gravity’s theory was that if employees didn’t have to use mental bandwidth on financial issues, they would feel more satisfied at work, loyalty and productivity would increase, and staff turnover would reduce. Price later stated that staff turnover had indeed reduced by half, which increased and improved employees’ knowledge and ability to help their clients. It’s certainly a fascinating concept, if slightly alarming, for the modern CEO who understands the need to value employees highly but also watch the bottom line. What to do if you wish to attract and retain good staff but you don’t happen to be a multi-millionaire tech CEO?
Know your value
In the post-Covid world it’s about transparency, trust, and clarity at work as well as the amount of take-home pay. Job hunters faced with hundreds of vacancies (and make no mistake, the market is inundated because of the Great Resignation) want to see at a glance how much a company thinks their role is worth. ‘Competitive’ is vague and subjective. Putting a number on it means employers are putting their money where their mouth is and letting candidates judge for themselves how ‘competitive’ that is. Staff and employers all know that valuing workers goes beyond a pay cheque, so flexible working, generous benefits and emotionally intelligent recruitment all allow potential staff to look under the bonnet of the employer beyond the starting salary and really get a feel for the company.
That is the ultimate purpose of an interview, and the subsequent salary negotiation. It isn’t about paying what you can get away with; it’s about attracting the right candidate for the role and for your company culture. With an eye firmly fixed on the horizon, smart employers can offer the whole package, and young people skilled in flexible working and financial knowledge will be more than worth the offer. Pay them well from the get-go and you could earn their loyalty for years.