The Fallacy of a Candidate-Driven Market
Updated: Mar 24, 2022
Candidates are getting more brazen by the day. It's getting ridiculous. Counteroffers, Sign-on Bonuses, Multiple offers. Unreasonable demands for PTO. The list goes on and on. It's reminiscent of 2007, just before the labor market completely fell apart.
My message to candidates interviewing for new positions is simple: Be careful what you ask for. Here are four things to keep in mind before making your demands:
1. This is an "A" player market If you're not top-shelf, you're in the same exact position now as you were last year…on the outside looking in. My clients continue to seek only A+ players to fill open positions. The only difference is these elite players are making more money. Yes, compensation for A+ players has increased by an average of 11.9% compared to one year ago For A+ players.
2. Remote Work & Geographic Arbitrage: We have been advising our clients since the beginning of COVID-19 to expand their job searches to areas outside of major cities such as WDC and the high-cost suburban areas (NOVA and southern Maryland). Secondary markets are a previously untapped source of less expensive, top talent Just because one lives in Roanoke, Lynchburg, Richmond, or Virginia Beach doesn't mean they're not as experienced and qualified as the candidate living in the upscale neighborhoods of Bethesda or Fairfax.
We have been able to uncover many top-shelf candidates just waiting to be discovered by the big national firms, and they are thrilled to finally have the opportunity to work for a well-known nationwide firm on a remote basis. The corporate acceptance of the remote workplace is the ultimate talent equalizer.
3. Inflated Compensation = Inflated Expectations: Some firms have no choice but to begrudgingly pay inflated salaries to candidates who seemingly have multiple offers and/or counteroffers to contend with, and if they have to fill a client-driven critical need, they will pay up The issue then becomes what do you do with their colleagues in the same office who have now fallen behind the inflation curve?
One client plans to limit these new hires to minimal salary increases and smaller bonuses moving forward; another is increasing the performance metrics and benchmarks for these new hires. Yes, they will have to work much harder than the rest! Another is cutting their voluntary benefits for everyone - why pay 100% of your employee's health care premiums if some hold a gun to head when negotiating a raise or new position? Profit margins have only become thinner, so increased labor costs have to be made up somewhere else.
4. LIFO: Last In First Out. This is traditionally an accounting term to describe inventory. The last piece of inventory arriving at the plant is the first one accounted for. It's done to write off the most expensive inventory first. The same goes for most employers now. It means that when/if the level of business softens or deteriorates, the first employees terminated will most likely be the most expensive ones and most recently hired. That could be you if you were hired at an inflated salary and not performing above and beyond the call of duty at all times.
So when you are negotiating your next salary with a prospective new employer, don't get greedy and insist on taking every last crumb on the table. It may be your last.