Earlier this week I read a blog from a firm called Boost Pricing about the importance of getting to the real story when a firm loses a proposal because of price. It was short and concise and reminded me of some important lessons I had forgotten about. The gist of the blog is that when the prospect tells me my proposal is too costly – the price is too high – there is a lot more to the story than price.
For context, the blog targets sellers of goods and services. I’ve priced consulting engagements and development projects over the years and I’ve heard my fair share of objections that ‘your price is too high.’ After some negotiation, sometimes I won the deal; more often than not, I did not win.
What does the pricing of consulting and software deals have to do with an Elevation Talent Group blog (where, after all, aren’t we supposed to be writing for talent and hiring managers in the HR and marketing space)? It turns out, quite a bit.
Pricing and the associated buyer and seller behaviors in the goods and services market can teach us a lot about the job market. Consider the seller of a consulting engagement as an example:
- You work hard on a proposal.
- You listened to the client.
- You worked with your team to get the scope as tight as possible.
- Your timeline matches the client’s ask.
- You present the deal to the client.
- The client engages in your presentation and asks great questions.
- The client thanks you and then there is a pause (days, weeks, months?) while they evaluate alternatives.
- You finally learn that you didn’t get the deal. “We loved your proposal; price is too high.”
The blog I mentioned earlier digs into the role of price as shield or mask for the real story. Doesn’t that sound like the hiring process? Whether you are a recruiter, hiring manager, or the talent (job seeker), the hiring process can feel similar. Consider the job market version of that story from talent’s perspective:
- You learn about a job opportunity.
- You prepare and tune your resume and ‘elevator pitch’.
- You pass through the firm’s screening process to determine if you are a potential match.
- You connect to the firm’s HR team. There are lots of questions back and forth while you are researching the firm and the role.
- The HR team submits your profile to the hiring manager and the hiring manager wants to meet you.
- You practice the interview and cover all the bases.
- You crush the interview and meet with more people at the firm. Compensation ranges get shared by the firm.
- You are getting ‘hiring’ signals. “We really like you. I think we might be a great fit. We are close to deciding.”
- A week or two later, you get a call from HR about compensation. It is awkward, but you get thought it by sharing your compensation expectations (You have the firm’s comp range after all.)
- More time elapses and you reach out for an update. You finally get a call back from the HR rep. “We really liked you, but your compensation expectations did not match what we expected to hear from you. We’ve decided to move forward with another candidate.”
- Before you hang up the phone, but after your initial reaction passes, you ask the HR rep to help you better understand how the decision was made and is there an opportunity to discuss compensation further. You’ll likely not get a satisfactory answer, but you’ll have tried.
That sad vignette should not be the end of the process for the job seeker, but too often it is. Instead, the talent should consider:
- Was the firm completely transparent about the job and the compensation possibilities? Firms can’t generally ask about salary history and pay transparency only goes so far. So, the quick answer is an emphatic, “No.” Firms are calculating in how they share information. Pay range data just creates boundaries on compensation (price). Some of the published pay bands I’ve seen are quite large. The larger the pay band, the less useful.
- Harvard Professor Deepak Malhortra writes about the other factors beyond compensation at play when a firm chooses one candidate or another. Compensation is often just an easy way to say, ‘No, we picked someone else.’
- Just like in the commercial selling process, the talent (seller) should realize that the firm (buyer) has a job to do, just like the talent does. Each party must sell and defend their value:
- Compensation too much? Talent wins and the firm overpays for labor.
- Pay too little? Talent walks and the firm still has a vacancy.
- Pay just right? Talent and the firm win.
The take-away for the firm and talent is to try and get pay right. Firms and talent are best served when they realize the hiring process is an extended negotiation and both parties should stay at the negotiating table as long as possible. Because information is the key to negotiations and the firm usually has more information than talent, talent must correct that situation. What should talent do?
- Adopt some skepticism around the process and ask more questions.
- Use external resources to understand the job market. Salary.com and Payscale each have good resources.
- Use recruiters. Take their call. Good recruiters help avoid the outcome I described above because they keep the negotiations going through the hiring process. Just like real estate agents play a role in the biggest buying decision most of us will ever make, recruiters help in critical career choices. Recruiters can get more engagement from firms than talent. Good recruiters advocate for their talent by:
- Giving talent feedback about their compensation expectations.
- Do a better job at listening and understanding if there is an authentic skill or experience gap.
- Assessing cultural fit.
- Prepping talent for the multiple interviews associated with many jobs.
- Getting to tough issues. For example, recruiters can learn if the talent’s compensation expectations had been $10k or $30k lower, would the firm have a different view? Or vice a versa, would the firm have not lost the candidate if the firm had offered more?
- How much more compensation? Good recruiters have an informed view on compensation for their specialty areas in the regions they work (just like the real estate agent knows certain neighborhoods).
Very few of us like to equate our pay and benefits to a pricing transaction. There is great dignity in work and pay is just too personal. We aren’t a used car on sales lot. Likewise, most firms don’t approach hiring like shopping on Amazon. But the reality is that talent and firms are the actors in a national the job market. Price and compensation are very similar and, as participants in the job market, we can learn a lot from the commercial goods and services markets.