Finding the perfect hire is hard enough; creating and posting a job listing, sorting through the applicant pool, and the arduous interview processes is a job in and of itself. Not to mention getting through all the training and onboarding to set them (and your team) up for success.
So, what do you do when your best candidate would be taking a pay cut to work for you? Is it worth the risk? Are you worth a pay cut?
According to this study, 20% of people are willing to transition to a job that offers a 10% pay cut in favor of a better work-life balance. The same study also found that 56% of individuals would be open to a lower salary for more stability and growth opportunities.
Several studies done in the last few years are reporting similar things. People are open to pay cuts when they feel they are compensated elsewhere.
Trends show that moms and millennials are looking for flexible hours, while business professionals are looking for hybrid and remote opportunities. Depending on the industry, your perfect candidate might be willing to negotiate on price if you have something else to offer.
Companies that invest in their employees' well-being report fewer turnovers and higher productivity levels. Benefits like healthcare, dental, and vision are key players in job offers. However, if you are unable to offer those, or they are just standard in your industry, consider putting mental health days, hybrid working, or flexible hours on the table.
Now more than ever, people prioritize their mental health by analyzing their work environment. Use an interview to understand what motivates them and what causes burnout. This will help determine if they are a good fit for the role and give you an idea of what they may value more than the offered salary. Promoting your company culture and its pursuit of establishing a work/life balance is a great conversation to have with existing employees as well.
You may not be able to meet their current salary, but you may be able to meet their career goals. When a business helps individuals reach goals, they build community and earn loyalty within their teams. Invest in different types of training, certifications, and education to help offset their salary expectations while equipping your team with more knowledge.
Many people are looking for a career change because they want growth opportunities. Have a plan for bonuses, and provide identifiable and quantifiable goals for raises and promotions to make your offer enticing without adding zeros to the salary. While so many people feel stagnant in their current role, you’re providing genuine upward or lateral movement in their career.
During your interview, ask where they want to be in the next few years and what steps they feel are needed to get them there. This will tell you if your company is a long-term fit for them and give you insight into what you can put on the table when it comes time to negotiate.
Not everyone is looking for a bigger paycheck. Some people have relocated, are pivoting in their careers, or are looking to pull back on professional responsibilities. In any of these instances, a pay cut is to be anticipated. Take the opportunity in your initial phone interview to get to know your candidates and their expectations. This can help weed out some of the red-flag candidates early on.
If your candidate is pivoting to a new career, you could be a great fit by helping educate and train them up to your standards. Even though they are taking an entry-level position and salary, they may bring a fresh look and eagerness to learn. Your willingness to help them in a field they feel passionate about will help offset a pay cut.
Candidates coming off a long hiatus will also have some catching up to do. An industry can change overnight due to technology and social trends. If they’ve been on a break for a while, they’ll have to invest a significant amount of time relearning the ins and outs. A performance-based bonus plan can be encouraged in exchange for a lower salary.
Relocation can be a significant factor in accepting a pay cut. If your candidate is moving somewhere with a lower cost of living or transitioning from a corporate position to a start-up, a lower salary is to be expected. Understanding why they are making that change can help give insight into their values and long-term goals.
Even though your offer might be enticing, not everyone does well with a pay cut. This can lead to high turnover or, worse, missing out on the person you should’ve hired instead.
One of the leading causes of younger workers quitting is feeling overworked and underpaid. If your candidate feels the position is too demanding or stressful, they will likely move on quickly. Know the position you’re hiring for and its demands. Did your candidate find similar work taxing or stressful?
Now more than ever, people are placing a higher value on their free time. Ask what their commute would look like. If hybrid or remote work is not an option, be sure to take their drive time into account. With gas prices constantly fluctuating and cars getting more expensive, people are struggling to justify a high gas bill for a low salary.
Indulgent lifestyles can also be a red flag; candidates accustomed to having ample spending money may struggle to budget. If they are already talking about how much they will need to cut back to accept the salary as is, it could be a risky hire. Passion and growth can only offer so much when faced with the reality of budgeting.
A pay cut can absolutely be worth the transition for the right candidate. If your company structure and values line up, accepting a lower salary may be beneficial to them in the long run.
Talk about the compensation. Negotiating benefits facilitates a conversation that can solidify personal and professional goals. You want the offer to be enticing enough for them to invest in you long-term, so you need to understand what they are looking for.
Keep your offer to industry standards. Your salary offer may be on the low end of the spectrum, but do not let it be an outlier. Good candidates do their homework, and in the age of information, anyone can find out how well your business is performing and will know if your offer is fair.
The Deep End Talent Strategies team is here to guide you through recruiting and hiring needs and compensation challenges. Contact us at email@example.com.