PINCHING PENNIES HURTS YOUR HIRING
We hope you can learn from our client’s mistake…
~Did he have the necessary education and technical know-how… YES!
~Was he a cultural fit… YES!
~Did he demonstrate industry knowledge… YES!
~Was his requested compensation competitive… YES!
~Did he get an offer… NO!
At the 11th hour, our client decided to return to Square 1 because of a $5k- $10k difference in compensation. The candidate was considering another offer and simply wanted them to match it.
(Not surprising in this competitive market!) Failing to recognize recent hiring trends, the client was “slighted” by the candidate’s counteroffer and started over. Keep in mind, this was a Sales role. Meaning, for every month the position went unfilled, the company was losing revenue.
Let’s look at the numbers… The typical sales recruiting process takes 3 months from launch to the day the new hire shows up for work. The average sales cycle is 30 days. The average deal size is $15k, with the average salesperson closing 3 deals/month.
Add it all up and… Our client opted to save $10k (the amount it would have taken for the candidate to accept the offer), while forfeiting $165,000 in potential revenue!
While no company should feel forced to pay above market, it would benefit every company to do a quick cost/benefit analysis to eliminate any emotionality (and penny-pinching) from the hiring process and avoid cutting off its nose, to spite its face.
Lesson learned: Don’t end up a “Penny wise and a Pound Foolish.”