Negotiating Compensation - The Headhunter's Role

by | March 31, 2009

As a headhunter, the most challenging facet of my job is negotiating compensation. Those few moments of the placement process can seem frustrating to both the recruiting firm and client company. However to candidates, compensation is their main, and usually only, source of income. I specialize in information technology recruiting, and because corporations have become so dependent on computers, these professionals are strongly aware of their value. Despite compelling arguments to temper expectations, even entry level and junior candidates demand, and occasionally receive offers, that seem beyond the common sense of only a couple years ago.

My goal is to close a candidate on the job and opportunity. None of my candidates will gain significant wealth with the acceptance of an offer. Their focus should be on the effort they must provide, the conditions to be endured and the goals to be reached in order to succeed. The best advice I can give is "do the work and the money follows." Meanwhile, the rationale that job changing brings an offer of increased income keeps growing. In the world of technology placement, the limits are being pushed higher and higher.

DETERMINING COMPENSATION

Some of the best information a company can release is the upper limit on compensation. I know that only the exceptional candidate will reach those heights. Therefore, it is to my detriment to oversell candidates on compensation and raise their expectations beyond a reasonable package. Neither will I expect a high offer on an acceptable candidate who exhibits only adequate skills. Withholding compensation information from a headhunter could mean wasted time and effort in the pursuit and qualification of candidates priced beyond a company's willingness or ability to pay.

Some candidates will express a self-worth that goes beyond a reasonable increase. My immediate reaction is to address that attitude and bring their demands to a realistic level. A typical response is that a friend or colleague received a large raise or guaranteed bonus or signing bonus. Perhaps their information originates from word of mouth, a news article or the urging of a friend or spouse. Regardless of the source, my job is to correct their false impressions.~I could ignore those candidates, yet premium talent is always difficult to find. With the cooperation of the company representative, we can work together and help the candidate focus on the opportunity itself; the career and technical growth, new challenges, increased benefits, internal mobility or other features the candidate is currently lacking. Patience is a key factor.

Some hiring managers and company recruiters insist on directly confronting candidates for their salary needs. The general feeling of candidates is not to negotiate for themselves, certainly not before learning details on the opportunity. My preference is, if a company representative wishes to engage in this conversation, that specific figures should be avoided. Current compensation can be confirmed; the benefits package reviewed; and a discussion on the company's compensation policies would be helpful. Some of my clients insist on demanding an expected salary range from the candidate at the start of the process. This approach does not stop problems from developing at the offer stage. Ultimately, a candidate could agree to any terms and then demand a higher figure later.

FOCUSING THE CANDIDATE

As the interview process moves beyond the initial stages, I refocus the candidate on the opportunity. Normally, the candidate gives more information than he receives until the company has firmly established interest. Since the company controls the process, some candidates have had to return for additional interviews after the offer was made merely to learn enough about the job to make a decision. While some hiring authorities may feel the job sells itself, candidates need more. Providing information and selling the opportunity are paramount. At some point, most candidates need to be convinced. That is a very normal stage for any of us in the course of a major change in our lives. This will not take the place of money, but it will help counter some of its effects.

Many of my clients have internal mechanisms for setting compensation. To ensure my input is part of the formula, a conversation must occur with the company representative and timing is important. Above all, this discussion must be kept friendly. The tug of war between headhunter and company must not be subverted by emotions. The right moment is as far into the interview process as possible just short of the subject being raised internally at the client. This allows the candidate to gather as much information as time allows and use that to gauge a desired set of figures. Some hiring authorities have clearly stated I should represent only the company's interests. This philosophy is based upon the company being the source of my fee. But if I do not represent the candidate then no one does. Only certain individuals accomplish a successful negotiation for themselves. My approach is to achieve a balance between the needs of both candidate and company.~I communicate a goal to the company. The range is drawn from the job description. The candidate's desired salary is tempered with the values determined by the job market and my knowledge of the particular client. Not every professional expects significant money, while some pursue a lofty figure. The approach I take must also consider competitive offers and potential counteroffers. The value a headhunter adds is in the role of mediator. Candidates can benefit from having an experienced professional present a case to the company. In return, a headhunter can provide an objective and informed opinion and sometimes a rebuttal to an excessive demand. Ultimately all parties gain, because the headhunter will offer compensation that the candidate agrees to accept and that the company is willing to pay.

SALARIES AND BONUSES

A common argument in negotiations is that companies worth billions can easily afford a few thousand dollars more in salary for one person. If that rationale were to be applied for every purchase or expenditure made by an organization, it would noticeably affect the bottom line of any corporation. For a company representative to respect me and have an actual interest in my opinion, then my explanation for a desired offer must have substance.

Since the great majority of my clients are investment firms, bonuses play a large part in offers. Candidates coming from a tenured position at investment firms are comforted by a history of bonus payments. Moving into a new job leaves room for doubt when a significant portion of income originates in a performance based evaluation in a unfamiliar environment. In these circumstances a sense of expectation, carefully worded, is essential and must be conveyed directly from the company to the candidate.

Whatever the offer, I have shown clients they receive my complete dedication in closing a candidate. Even generous offers can result in a challenge due to a counteroffer, competitive offer or old fashioned cold feet. Again, aside from money, the best help comes in the form of information. Hiring authorities should not view a difficult close as a reason to distrust or reconsider a candidate. Both making and accepting an offer entail risk.

Candidate expectations, for the most part, are excessive, as in ny negotiation. When a headhunter works in concert with a company, their mutual pledge should be to turn candidates into employees.

Ronald Weiss has been a New York based technology headhunter since 1984 and started The BMW Group in 1990 with two partners. He will always be a hands-on recruiter as well as training staff, and co-managing the business. His degree in Communications and Science is from The American University.

Filed Under: Job Search


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