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You get what you pay for and you Pay for what you get December 5, 2008

Posted by ryanleary in General Recruiting.
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pay20here20signThanks to a Colleague of mine for this recent post. It’s a great article on the thoughts and theories behind hiring quality talent and distinguishing their market value. Please visit Jody Meyerson’s LinkedIn profile for more information at: Jody’s LinkedIn Profile

Written by Jody Meyerson

You get what you pay for. Conversely, you must be prepared to pay for what you get. This is abundantly clear to consumers when purchasing a product, such as a new car. Why, then, is this such a difficult concept to grasp when the product is a person, such as in the case of hiring a new employee?

To illustrate this point, let’s first look at education. How many times have recruiters heard, “this position only requires a Bachelor’s degree” in order to justify a lower salary for an MBA candidate? While that statement may be true, it is also true that the MBA candidate has a higher value in the marketplace and cannot be hired at a lower salary simply because the position doesn’t require an advanced degree. To put this in terms of a new car, imagine that you are in the market for a midsize sedan, but take a luxury SUV for a test drive and decide to purchase it. Is it reasonable to expect that you will receive the SUV at the price of the sedan, simply since you don’t “need” an SUV?

Now, let’s talk about experience. Take the case of an entry-level position, and imagine that you interview a candidate with five years’ experience and decide to extend an offer. It is a reasonable expectation that this experienced candidate will demand a significantly higher salary than you would have had to pay an entry-level candidate. To draw another “new car” parallel, suppose that you are looking for a new car with only the most basic of options. If you test drive and decide to purchase a “loaded” model, shouldn’t you expect to pay the price?

Finally, it’s important to consider market value and the basics of supply and demand. If the car you want to purchase is a popular new model that is in high demand, it is usually unreasonable to expect a significant discount. Similarly, if employees with certain educational and professional backgrounds are also in demand, why expect to be able to attract them by paying them less than your competitors are offering?

Today’s increasingly savvy candidates understand their market value. The best of them have interviewed with multiple potential employers and frequently have multiple offers on the table. And while most consumers expect to pay market value for a commodity such as a new car, many companies still expect to attract the best employees at bargain prices. The cost of not coming to terms with this is the loss of revenue associated with unfilled positions. To draw one last parallel, how many of us would rather pay fair market value for that new car than start hitchhiking to work?

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