How Saving Money on a Salary Can Cost You the Candidate

May 7, 2013 12:00:00 AM · by Healthcare IS Team

In a decision-making position, it’s often your job to save the company money wherever possible. Whether you accomplish this through effective vendor management, staff reduction, or offering lower salaries, you, as a manager, are usually looking for ways to save a few extra bucks and, as a result, make yourself look good. 

If you’re successful at lowering vendor costs, you’ll be seen as very successful at saving the company money. If you can eliminate a few salaries, without eliminating productivity, this too will reflect as a positive for the company. But if you offer a low salary to a candidate you want to hire, not only could you lose the candidate altogether, but you could also cost the company money. 

There are only a handful of reasons why people make a career move, and money is certainly one of them. Particularly when you’re dealing with someone who’s currently employed, you have to make sure that you’re competitive with the market. Offering someone equal or less money than they’re currently making may suggest that you don’t see value in what they can bring to the table. 

If you’ve decided that you want to hire someone, you’ve decided that they will benefit the company in some way. They can generate revenue for the company, save the company money, or grow the company to be more profitable. If you perceive this value in them, you have to reflect that value in the dollar amount you offer. 

In my experience, I’ve seen far too many turndowns due to low offers.  Candidate will frequently take offense to low offers and, at times, they do not want to counter it at all and simply walk away from the deal. This is where the company can lose money by trying to save money. The process of identifying, interviewing, and hiring is very costly, and to have to start over again can cost more than what would have been saved by the low offer. 

Even if a low offer is accepted (usually by someone who’s unemployed), oftentimes that person will leave the position within six months — just as soon as something comes up that will pay them what they feel they’re worth. Again, the company will have lost even more money this time. Having spent time and resources to train someone only to have him or her leave, and then be replaced, can cost thousands of dollars. 

The bottom line is if you find a candidate you want to hire, someone you feel can provide value to the company, make an offer that reflects this. Make your best offer — not the lowest offer you think might be able to get them. 

You may also like: Are you a B company looking for an A player?

Hiring, Corporate Culture, Healthcare IS Team


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