Benefits: The employer trick that lowers your job offer

On November 27, 2017

In the November 28, 2017 Ask The Headhunter Newsletter, a reader interviews for a job at an acceptable salary, only to learn the employee benefits would mean a 20% reduction in compensation.

Question

Well, thanks for hitting me between the eyes… again. I’m talking about your recent column, More Money: What to ask for in a talent shortage. I was rationalizing a pursuit of a job offer. 

benefitsIt’s a great fit. I “did the job” with the Chief Information Officer and Director. The 30-minute phone interview turned into a 90-minute great discussion on where they want to be in 18 months. Now I have the technical interview. 

The problem is that I misunderstood the benefits. Originally I thought it was a wash in salary, and that the cost of living, benefits, retirement, and bonus were going to be a 20% bump. With relocation to a warmer climate, it was a win-win. Then I got the benefits package. 

I completely misunderstood. Once the benefits are factored in, it’s effectively about a 20% pay cut. There is no way I can absorb that. It’s a small shop and moving up would not be possible for a while given the staff they have in place.

(By the way, the recruiter for this company is absolutely amazing. She completely vetted me before she passed me to the company. She asked for my resume and then recommended that I change the wording on a couple of things. She never had me fill out an application. Then she set up the preliminary phone interview. We discussed salary but I think I heard what I wanted to hear. Fortunately, after that first interview, I asked for the benefits package. She sent it to me while I was on the phone with her.)

So here is my question for you. Do I go through with the technical phone interview and see if I can work with these folks? Then, before we put in any more time and money (and airfare), do I see if they can pay what I think I am worth? Or do I call it off now saying that it is a waste of our time if they are going to stick with their current salary range, given that the benefits are actually going to cost me money?

Nick’s Reply

The recruiter tells you: “The salary range is $X-$Y and the benefits are industry-standard.” Once upon a time, that meant you could decide to go on the interview based on the salary range. Today, it’s a common trick to lead you into a series of job interviews that result in a job offer far lower than you expected — after you realize that a lousy benefits package has effectively lowered your total compensation.

There are many other reasons to decline a “job opportunity.” See When job interviews are bad for you.
It seems you learned an important lesson: Get the compensation facts before you dive into a time-consuming interview process. That means understanding all the bottom-line terms, including benefits — up front.

Benefits are compensation

Make no mistake: Benefits are part of compensation. Lame HR managers like to say, “Oh, our benefits package is industry-standard,” as if you should be impressed. Really? A company’s benefits package should be as competitive as the salaries it pays — that’s what gives a company an edge!

(Note to HR managers: Learn to use your company’s benefits as a tool to get the best candidates to accept your offers! That means you must construct great benefits packages. That’s a key part of your job.)

Benefits and bonuses are components of compensation. Until you can tally up the total, you don’t really know what the offer is — or whether the company is worth working for.

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Why are benefits a secret?

But don’t kick yourself too hard. Companies generally don’t hand out benefits details before interviews – though they should.

Many employers consider employee benefits a company secret that’s not disclosed until you show up for orientation. (Imagine a car dealer saying, “We’ll tell you what the warranty is, and how many wheels the car comes with, after you pay for the car.”) As you’ve learned, benefits are a critical part of any compensation package. Meager benefits can undermine a seemingly good salary.

So, ask about the benefits and the salary range before you invest time interviewing.

Look under the rug

When a company’s lousy benefits have such an adverse impact on a compensation deal, there’s probably something wrong with the company. There’s dirt under that fine-looking rug. So turn up a corner and look underneath.

Is the employer a cheapskate? See WANTED: Top talent to work for dog food.
Good employers offer good benefits. And they don’t hide such information. When they do, it’s the oldest sales trick in the book: They count on you to rationalize a bad deal because you’ve already put so much time and effort into it.

I don’t see any evidence that you misunderstood. If you didn’t have the benefits information in advance, how could you really judge whether this was a good opportunity or a waste of time? How could you have judged the whole compensation package?

The recruiter’s role

What’s “amazing” about the recruiter is that she did not disclose up front that the company’s benefits package is lousy.

Is that really a good recruiter? Use these tips to decide: How to Judge A Headhunter.
I assure you, she knows, because other candidates have experienced the same shock you did. While I give her credit for some of the things she did (and didn’t do — like demanding an application), if she’s a really good recruiter, she reviews all compensation components before she recruits people like you. I’d never pitch a company with lousy benefits to any potential candidates. I’d wind up wasting their time and mine. My guess is she’s lost other good candidates late in the process, after all the facts came out.

Ask to see the benefits

Job seekers rarely ask to see benefits, retirement, vacation, bonus and commission details before agreeing to interview. That’s a mistake. Employers don’t like sharing such information until they make an offer, but that’s disingenuous. Any company with great benefits is more than happy to use them to entice good candidates to interview.

One of my favorite HR ruses is this statement: “We offer the same benefits to all employees. We cannot change our benefits for just one person.” People hear that and they shrug. Of course they can’t change their benefits just for me. That would be unfair to all the other employees. Then an applicant rationalizes that there’s no choice. If I want this job, I have to settle for what everyone else gets. Wrong. If the employer really wants to hire you, it can improve other terms of the offer to compensate (remember that word?) for poor benefits. (We’ll get to that in a minute.)

Companies with lousy benefits hide them, and HR managers try to make job applicants feel it’s “unprofessional” to ask for the information in advance. What’s unprofessional is luring people into dead-end interviews.

Don’t kid yourself

I see it again and again. Job applicants get offended and angry about the details of a job offer at the end of a grueling interview process — because they failed to ask about all the terms before they invested all that time and trouble to interview. Of course the terms matter! Don’t kid yourself! Understand the fundamentals of the deal before you work so hard to get it.

Many career experts recommend proceeding with the hiring process anyway. “Hey, you have a shot at a job! Why blow it by bringing up money?” They will tell you to wait until the offer stage to convince an employer to do what it already told you it will not do. Don’t kid yourself. That kind of advice reveals the advisor doesn’t have an answer for your predicament, because the advisor believes in fairies and miracles.

It’s up to you, but I would not rationalize any more, or move further into this process, now that you know the benefits are a deal breaker. Talk to the recruiter. Tell her your concerns. Tell her you’re very surprised and dismayed at the benefits package.

How to Say It
“Thanks for sharing the company’s benefits package. Unfortunately, it’s not competitive and would represent an effective 20% pay cut. I’d love to continue our interviews, but first I need the company’s commitment to compensate me for the significant difference in benefits they are proposing. It would be a waste of our time to keep talking about the job if the compensation terms — and that includes benefits — aren’t acceptable. Will your client make that commitment?”

What to ask for next

Don’t be too hard on yourself. If the salary range was acceptable and you based your decision to have a preliminary phone interview on that, I think you took a reasonable risk to explore the job. While you should have asked to see all the benefits up front, 99% of applicants don’t ask until after a job offer is tendered. At least you asked early in the process.

What troubles me is that the recruiter didn’t disclose the problem with benefits when she first spoke with you. I put that on her. So I’d let the recruiter know what’s wrong immediately.

Don’t say no to proceeding. Instead, tell her what the terms need to be so they’re acceptable to you. Don’t worry about whether the employer is likely to accept your terms. The point is to establish what it will take before you are willing to proceed. The details are up to you. Here are some possible gimmes:

  • Higher salary, commensurate with the loss of benefits value. I think this is the best offset because it will fund the difference.
  • A starting bonus, but keep in mind this would be a one-time payment that does not affect future pay. I’m not a big fan of this, unless you can’t negotiate higher salary. Then you must decide whether it’s worth it.
  • A higher bonus structure that effectively makes up for the loss in benefits. Just keep in mind that bonuses are not guaranteed. So ask for a guaranteed bonus.
  • Other terms that might satisfactorily compensate you.

Clearly, they are impressed enough with you to go the next step. They want to pursue this with you. That gives you leverage. Don’t be afraid to use it wisely and appropriately. Hey — if they have no qualms about offering you poor benefits, don’t worry that you’re asking for too much! Let them say no, or let them fix the problem.

Manage the recruiter

It seems you’ve found a pretty good recruiter — she’s done a lot right. Take advantage of that.

I’d tell the recruiter that if this deal doesn’t work out, you’d like to work with her again, if she commits to vetting these deals more thoroughly for you in the future, before setting up even phone interviews. Like this employer, she has recognized a good candidate. She is likely to work harder for you in the future because you represent a really good chance for her to impress another client — and to earn a good fee!

Make the employer work for it

Don’t get tricked into dead-end interviews by an employer that uses crummy benefits to effectively lower a job offer.

An employer uses interviews to test a candidate, to determine whether it’s worth proceeding with the hiring process. Job candidates should do the same. Test the employer. Will its compensation package, including benefits, bonus and other terms, measure up to your requirements? Then determine whether to proceed. Make them work for it, just like you do in your interviews.

I’d love to know how this turns out. My comments and suggestions are obviously limited to what I know. You’re the one that must live with the choice you make – so please use your best judgment.

What information do you demand before you agree to interview? We’ve covered only a couple of things here — salary range and benefits. What surprises have you encountered only after you’ve invested a lot of time in an “opportunity?” What else should this reader assess before going any further?

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More Money: What to ask for in a talent shortage

On November 13, 2017

In the November 14, 2017 Ask The Headhunter Newsletter, an employer makes a lousy job offer and a job seeker misses the point: Ask for more money.

Question

more moneyAfter three interviews that included a lengthy presentation on how I would do the job, I was made an offer for a director-level position in a major city. I expected the salary to be upwards of $70,000. My current salary is $63,000. I also get good health benefits that cost me nothing out of pocket.

I was stunned when the offer came at $45,000, and I’d have to pay for health insurance. I literally cried. I am 33, 11 years out of college, and my resume rocks. Do they think I’m stupid? Are employers really so clueless? In this booming metro area, new grads get $45,000 for entry-level jobs. What they offered seems like a joke!

Should I even try to negotiate for an additional $20,000 to $30,000?

Part of me wants to tell them to screw off. The problem is that this director-level job sounds really great. But I would lose my apartment because average rents in the area are $1,800 a month. I couldn’t afford it, and I wouldn’t have enough for gas or  food. Maybe they think I live with my parents?

Where do they get off offering entry-level pay for a director role to someone with 11 years experience? Any advice? My family, my friends and I are in shock. Help!

Nick’s Reply

Employers complain there’s a talent and skills shortage, and that good workers are hard to find. But wages are not going up enough to reflect such claims.

Greedy employers and the talent shortage

I think it’s clear employers are doing three things:

For more about cheapskate employers, see Wanted: Top talent to work for dog food.
  1. They’re bargain hunting.
  2. They’re keeping more of their profits while productivity is increasing.
  3. They’re avoiding sharing profits in the form of higher pay for hard-to-find employees.

What does this tell us? If you’re a talented, hard-to-find worker talking to a company that’s facing a talent shortage, you should ask for more money because you can.

In July 2017, the Economic Policy Institute (EPI) reported that “CEOs of America’s 350 largest firms made an average of… 271 times more than a typical worker in 2016.” (In 1965, the compensation difference was 20X.)

If you don’t think there’s any error in the offer you received, then consider that it may be how the company operates. It’s greedy. So ask for a higher job offer.

Don’t contribute to the problem

Now I’ll reprimand you. I imagine you did not ask the salary range on the job before you invested your time inteviewing. That’s a huge mistake. Make sure you and the employer are on the same page from the start. When job applicants fail to test a salary range before interviewing, their wishful thinking contributes to wasting time. On the other hand, if you tried to assess the salary range and the employer declined to tell you what it is, see The employer is hiding the salary.

I give you a lot of credit for using the interviews to demonstrate how you’d do the job. (See The Basics.) That’s how to interview, and I’m guessing that’s why they chose you! But the salary offer is another issue.

Don’t rationalize

I’m concerned that you are already rationalizing taking a job for half what you think it’s worth because “this director-level job sounds really great.”

Really? Many employers try to substitute impressive job titles for fair salaries. They count on candidates talking themselves into an undesirable deal.

The problem now is that you may be confusing monetary compensation with the lure of a fancy job title. I’ll give you the benefit of the doubt and assume this really is a director-level role. Please be careful not to sell yourself short during a talent shortage. A title is not compensation for doing a job.

Accept the job and ask for more money

Learn from those highly paid CEOs. The EPI report notes that: “CEO compensation has grown far faster than that of other very high earners in the top 0.1 percent…” Why? EPI concludes it’s because of

“the power of CEOs to extract concessions.”

Pay attention! CEOs make big demands because companies perceive that there’s a shortage of great CEOs. You can play this game, too, if you have the nerve.

If you are ready to walk away from that job offer, then you have power because you have nothing to lose. So do not say “No” to the employer. Drive them nuts instead. (They deserve to have their cage rattled for playing salary games with you.) Treat them like desirable CEO candidates treat them. Accept the job, but extract concessions on the pay.

That’s right: If you still really want the job, why not try to get it on your terms? I’d accept the job, but I’d change the terms. You’re allowed to change anything you want in their offer before you accept it completely. Then it’s up to them to decide whether to agree.

How to Say It:
“I showed you I could do the job profitably for you, and I’m glad you were impressed enough to want to hire me. I want the job and I’d love to work with you! So I accept the job. But I cannot accept the terms you have offered. I’m ready to start work [tomorrow, or whatever day you choose] at $72,000. I will leave it up to you.”

Let the employer decide

Do not say anything more. (This is difficult, but keep your mouth closed past this point until they answer.) They already know all the reasons they want to hire you. Now let them consider whether they are willing to pay to get what they need, or whether they’re willing to lose you. (It can be a very long way to the next great candidate in a talent shorage!)

They will probably say no. But when they realize you’re really ready to walk away, it’s now on them to make a decision. They may come back with a better offer.

If they don’t, and you really are looking for a $70,000 job, politely tell them the following.

How to Say It:
“I am worth upwards of $70,000 in today’s market, where employers are complaining about a talent and skills shortage. I’ve found that your competitors are determined to hire hard-to-find talent and to pay what I’m worth. I wish you the best – it was wonderful to meet you and to learn all about your company.”

You don’t owe them any explanations at this point, so don’t let them drag you into a debate. Remember: They’ve already settled the main question: They want you. Now they must decide whether to accept your terms. If they press back, decide in advance whether you’re comfortable saying the following — then say it and stick to it:

How to Say It:
“I’m ready to take this job because I want to work with you. But my salary terms are not negotiable.”

Note that you have not rejected ther offer. In fact, you made a commitment when you accepted the job. Now let the employer decide whether it accepts your terms.

“I want more money.”

If you think you’re worth it, let an employer know you want more — and say how much. Just keep in mind that if they accept your revised salary, it’s not appropriate to negotiate anything else. You already said you’ll take the job if they meet your terms. If there are other things you want to negotiate, do that before you take a stand on the compensation.

For every employer that pays its CEO more than 200X what it pays the lowest-level employee, there needs to be a job candidate who is smart enough to insist on sharing that kind of wealth and success. The CEO is just another employee.

When they need you, extract concessions

You ask how such employers “get off offering entry-level pay for a director role to someone with 11 years experience.” Don’t over-think this. They do it because they think they can get away with it. That’s also why CEO candidates demand more money.

When is the last time you accepted “Because I said so” as the justification for why someone wanted to take advantage of you?

For more on this topic, please read “How can I go back and ask for more money?”
I’m not suggesting that you should be greedy and expect more salary than a job is worth. But if you’ve come to a reasonable conclusion that this employer is being greedy, and you think you can get a good job that pays $70,000 or more, you should not waste your time considering an unsatisfactory deal. Do not waste time negotiating. Instead, extract concessions or move on.

Look – if you need to pay the bills, and you need a paycheck of any size, I’m the last person to criticize you for talking yourself into a lower salary. Do what you must to live. But if you feel as strongly as you suggest you do, don’t fall victim to a greedy company that’s bargain hunting.

On to the next!

Do you know when to ask for more money? When you know you’re going to walk away anyway, don’t say “No” to a low job offer. Say “Yes, if you’ll pay me what I want.” Have you ever drawn a line like this?

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Job applications are the biggest recruiting scam

On November 7, 2017

In the November 7, 2017 Ask The Headhunter Newsletter, a careful reader gets recruited to fill out a job application. Welcome to recruiting today.

Question

recruitingEarlier this week a recruiter contacted me. The salary was stated as a maximum only, and it would mean a 20% raise from my current salary. Even though I am not looking, I went ahead and applied. Following your advice, I asked who the company was and the recruiter told me “in confidence.”  I disclosed that I know someone there, but didn’t give a name. The recruiter said he could still submit my name, so I gave him a PDF copy of my resume.

Things changed fast!  First, he said I would be required to fill out an online application for the HR department. But I couldn’t proceed with the application unless I put in a numerical value for salary. I asked about this and he said whatever I put in could be discussed later. I put in $0. There was also a short “personality test.” I completed all this by mid-day Friday. By noon on Saturday, I got a rejection notice. BAM!

Could it be my salary expectations were too high? The recruiter recommended I come down, but because I’m not desperate I did not. Could it be that HR was totally offended that I was non-compliant? My feeling is that a junior HR person went over this and saw one thing out of order, and eliminated me. I seriously doubt that this application got further.

The bottom line is that I would not want to work for these people anyway, but I will admit that such a rapid-fire rejection hurts. Maybe I will hear from the recruiter as the week begins, or maybe not.

Next time I will ask if the recruiter’s contact is a hiring manager or HR. If it’s HR and not a manager, I will pass. So this was a good lesson learned. It cost nothing. Insofar as missing out on the raise? No problem there because I am not yet vested with my current company and I would lose the equivalent of the raise if I moved now.

Two last questions: Why does just about every recruiter who contacts me seem like a slime ball? How can they sleep at night?

Nick’s Reply

Welcome to the biggest recruiting scam going: job applications. Thousands if not millions are victimized daily. They don’t even realize it. You didn’t get recruited. You got scammed. And it’s legal. Employers encourage recruiters to scam you every day.

A recruiter contacted you to recruit you. That is, he’s out scouring the world for the right candidates for his client. He identifies the best, and then he goes after them — he pursues them. He and his client still need to interview you to be sure you’re right enough, of course, but they chose you and now they’re approaching you, enticing you, seducing you, cajoling you, trying to convince you — the guy they selected to go after — to consider a job there. They’re trying hard to impress you with an opportunity so you’ll invest your valuable time to talk with them.

Is that how this process felt to you? Of course not.

Recruiting you to fill out a job application

You were not recruited for a job. You were recruited to fill out a job application.

You were recruited off the street to do what anyone does to apply for a job they found posted on a job board. My guess is the employer is not even the recruiter’s client. I doubt they have a contract. The recruiter is hoping to throw enough job applications at this employer, in the hope one might “stick” so the employer might pay the recruiter a fee.

The recruiter led you down the path every other job seeker takes on their own. Like every other job seeker that is summarily rejected instantly, you got rejected. No surprise!

The only difference between job applicants who go through the process and you is this: If by some miracle you had been hired, the recruiter would have earned a big fee for doing nothing but ushering random people through the application process.

I’ll say it again: You were recruited not for a job, but to fill out a job application.

Recruiting to fill a job

Here’s what recruiting really looks like. Last week I finally reached a person I’ve been trying to recruit for almost a month. She’s a good candidate for my client. The president of the company and I carefully selected her because our research showed she fit our carefully defined criteria. I knew exactly why I was reaching out to her.

When I finally reached her, it was to set up an interview with the president of the company. No forms. No online links. No personality tests. No obstacles.

My job for a month was to eliminate obstacles so my client could talk to her. I never asked her for her salary information. I still don’t know it, and I don’t care what it is. When I finally got her on the phone, I spent most of the time trying to impress her. I didn’t want to let her get away.

My goal has been to pursue and persuade her to talk with my client about a job — and to impress her with the opportunity so that we’d have a good chance of hiring her. Why would we risk offending her by making her jump through hoops? That would not have impressed her!

How to test a headhunter

  • Who are some of the headhunter’s clients? Get the names of companies and managers.
  • Who has she placed? Get the names of a few candidates placed recently and a year or two ago.
  • What firm does she work for?
  • Where is she located?
  • Who owns the firm?

From How to Work With Headhunters, pp. 28-29.

Why they do it

Recruiters like this one sleep at night by mentally counting all the lottery tickets they’ve acquired — job seekers they’ve convinced to fill out job applications. Then they dream that a company will pay off on one of them.

The daily recruiting scam is a numbers game. Recruiters play it because sometimes it pays off — just like everyone else plays the lottery.

How to save loads of time

The recruiter’s trick is to get you to spend loads of time applying for a job that pays “20% more than you’re making!” It’s a simple rule of behavioral psychology: The more the recruiter can get you to do, the more you will then rationalize doing even more to comply. So the recruiter’s goal is to get you to start complying.

You ask what to do next time. Here’s a quick and sure way to save loads of time. The next time a recruiter contacts you, ask this question:

“Why does your client want me?”

Then ask this question — and nothing else:

“When does your client want to talk with me?”

For more on this topic, see Why do recruiters suck so bad?
If the recruiter answers with a list of tasks for you to do first — submit your resume, complete online forms, take a test, disclose your salary — tell the recruiter to take a flying leap into a cactus bush.

It takes a mental re-set to realize what that guy did to you. He made you apply for a job. It’s the daily recruiting scam.

How do you sort out the recruiters? What percentage of contacts from recruiters have resulted in face-to-face job interviews for you? At what point should the reader above have recognized what was going on?

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