Is hiring a cost or investment? How employers blow it

Is hiring a cost or investment? How employers blow it

In the March 31, 2020 Ask The Headhunter Newsletter a reader says hiring and job offers should not be based on your tax returns.


hiringI was once asked for my tax returns after a job interview, evidently to determine a job offer. I thought you priced a salary to a job — not what you might have to pay a candidate to hire them. I declined the job because the request displayed the kind of people I would be working for. They were forced to sell the company shortly thereafter. What’s your opinion on how to set a salary and job offer?

Nick’s Reply

I don’t believe in setting compensation based strictly on the job. That’s shortsighted because it assumes a job cannot be done in a way that increases its value to the business. I think sound job offers are based on the value of the job at that company, and on the added value the best candidate brings to the job. In other words, if it recruits effectively, a company spends more than it planned because it finds a hire who can do more than it expected. HR managers will want to hang me for that.

Consider the example of a job posted to write computer code using computer language X. Hiring a programmer who knows language X would get the job done just fine and within the budgeted salary. A programmer who is facile in languages X and Y (languages unexpected and not required by the job description) shows it would take less code and time to produce a more powerful program in language Y. (Software developers don’t hang me! This is an over-simplification.) But this programmer expects a salary 25% higher than the budget for the position. Does the employer calculate the benefits of investing more in that programmer?

Hiring: How are job offers determined?

A smart company has to start by (A) pricing a salary to a job. But that means management has a realistic idea of the value of the job. That is, how does it contribute to the bottom line? I don’t know many companies or managers that could explain how any particular job contributes to profits. Of course, it’s a game of estimating, but I think few even try. They focus strictly on the overhead cost of filling the job.

Once that number is set, I think a company needs to (B) look at the market for availability of candidates, and adjust how much to pay accordingly. Of course, that’s an estimate, too. (I do not advocate relying on salary surveys.) We must assume employers are rational and that they calculate expected profits before making hiring decisions, right? Or, how could they defend their business model and be successful? (Yes, those are loaded questions and snipes.)

Job offers test the employer

As an employer, you find out how well you understand your business when you actually make job offers. Your job offers are a test. If you get turned down by your best candidates, then your (B) estimates are probably incorrect. You’ve failed.

But it’s also possible your (A) number is off — and I think that means you have to reassess your business assumptions: Is that job really valid? That is, does it really feed the bottom line, or is it actually busywork? Put another way, can your company afford to hire someone to do the job? The accuracy of your job offers — Do the best candidates accept them? — tests the viability of your business model.

If you can’t afford to hire the best workers, there may be something wrong with your business.

Learning from candidates

I think the fun starts when you talk with candidates who can upend your (A) estimate. That is, they show you they can do the job in a way that increases profitability beyond your expectations. This is where the interview process really pays off if you do it properly. You’re learning about the candidate, but you’re also learning from the very best candidates, who will show you how to tweak the job and the work to cover higher compensation and to produce more profit.

Do your interview protocols identify such candidates? Does your compensation policy enable you to hire them?

Perhaps a candidate has unexpected skills and expertise that would boost creativity and efficiency in that job, thereby increasing the value of the hire. (That means you’re recruiting well!) Isn’t that the “dream candidate” every company would love to find? Isn’t that who HR is really advertising for when the job posting says, “We’re looking for stars who think out of the box!”

Is hiring a cost or an investment?

I find this is where most companies blow it — especially if their HR department is mired in policies that interfere with re-pricing a job to a higher compensation level. They absolutely will not consider paying more to get more.

Rather than change the parameters of the job and the compensation to suit an exceptional candidate, they reject the candidate “because they cost too much.” (Age discrimination, anyone?) But that exceptional candidate is not a cost. They are a potential investment that can pay off handsomely — if the company steps up to pay more to get more. (Of course, management must also know how to properly exploit exceptional skills.) This is an incredibly important part of a company’s learning curve, and I think too many companies don’t recruit to find that kind of value. They’re potentially blowing an opportunity to boost their return on investment.

So much for “We want to hire people who are off the performance curve!” They’re also off the normal compensation curve. They’re pricier!

How companies blow it

It’s one thing when a company prices a job inaccurately. That is, when it gets its estimate (A) wrong. But I think a company really blows it when it inaccurately estimates (B) the value that’s available in the candidate market — and refuses to pay more to get more.

The problem is HR policies that make the very best candidates walk away. For example, “Our salary range is fixed. We cannot consider a higher salary.” Or, “We can’t proceed until you give us your salary history [so we can preemptively destroy your ability to negotiate your new salary].”

Or, as in your case, “We can’t proceed without your tax returns.”

These are all silly practices that drive away the very best candidates. (See Your Approach to Hiring Is All Wrong.) Exceptional hires return the investment required to get them, and then some. But again, I think the key is that management must know how to measure the value of both a job and the candidate who is going to do it.

Perhaps more to the point, management must understand the basic idea that the ROI of a job can be enhanced by investing more in a hire who can do it better.

Regarding the company that was sold shortly after you turned it down: It seems you heard the message loud and clear. “We rely on some other company’s judgment of your value (reflected in your tax returns). We have no competitive edge because we have no idea how to judge your value to our business! Run!”

What are you worth to an employer? How does a smart company figure it out? Here’s my challenge to you, dear readers: If you’re dealing with an employer that can’t figure it out on their own, is it worth making the effort yourself to explain it to them? (That is, to show them why you’re worth more?) How would you do that?

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Should I renege because I got a better job offer?

Should I renege because I got a better job offer?

In the March 24, 2020 Ask The Headhunter Newsletter a student accepts a job offer, then gets more interviews and a better offer. What now? Renege on the first offer?


renegeI am in deep turmoil right now. For quite a while I was not getting any calls let alone interviews. About a month ago I got interviews with three companies. Company A made an offer and Company B made an offer later in the week. I didn’t hear anything back from Company C. Out of fear of losing my first real offer, I quickly accepted Company A. Company B’s offer was nothing compared to what A offered. However, it’s a job in the industry I prefer.

About two weeks later, I got calls from Companies D and E. I passed phone screenings at both, and both invited me to fly out for interviews. These were really good jobs for a soon-to-be graduate that include good leadership programs. I asked my professors for advice on how to prepare for these new interviews, and what to do about the offer I accepted from Company A. They right away reproached me for still interviewing after accepting an offer. They talked me out of going forward with Companies D and E, so I cancelled those interviews and told them my situation.

Now I am having second thoughts. I am still in talks with Company B for a possible better salary. It’s a better fit for me. I am even considering reopening talks with Companies D and E. And now I am receiving calls from a new Company F. I am thankful for where I am, but worried that I may have accepted to soon and the job might not fit me.

Nick’s Reply

Congratulations on all the interest you have stirred up, and on your job offers. While I respect the intent of your professors, I don’t agree with them. In fact, this problem of staggered job offers and rescinding acceptance of a job offer is something I’ve covered in detail in Fearless Job Hunting, Book 9: Be The Master of Job Offers.

The bird-in-the-hand rule of job offers: When you have one offer in hand, and you’re waiting to complete interviews with several other employers, you still have just one offer in hand. And that means you have just one choice to make. (From Fearless Job Hunting, Book 9: Be The Master of Job Offers, p. 12)

Should you renege?

The gist is this. To renege on your acceptance of a job is a crappy thing to do and it may have adverse consequences. But it is your choice to accept those consequences if you think another offer is compelling. That is up to you.

Just as companies sometimes rescind job offers (rare, but it happens) and companies sometimes lay people off for purely business reasons (nothing personal), people sometimes renege after accepting a job and take the consequences.

But be careful: It seems your C, D and E opportunities are still not solidified completely. That’s another risk you take if you rescind your first acceptance. Don’t play the odds and be left with no offers at all. Sit down and flow-chart how things may play out, and how your decision might have some adverse impacts on your reputation. There’s a cost to everything. The thing is to make informed judgments and choices.

Choose the best job offer

I know your professors will disagree with me, but I stand by my advice: Make the best choice, consider the downside, and decide whether you’re willing to accept the consequences. (For example, upsetting an employer.) Please keep in mind that there is risk in any of these choices, including the dissatisfaction of working at a job you changed your mind about.

Odds are high that you will search for a new job within a couple of years – not because you didn’t choose carefully, or because you’re not dedicated. It will be because you will develop your first sense of what’s important to you and what motivates you. The simple truth is, at your age you will change very much in the next one or two years – and that’s good.

Choose the best company

Concern yourself with making a choice to work with a company that has these 4 qualities:

  • Good people – who will mentor you.
  • Good projects and products in the pipeline – that you will work on and learn from.
  • Good financial prospects – so you won’t have to leave unless you want to!
  • The respect of its customers, vendors, and peer companies.

But mostly, choose the company with the best people. Ask to spend a day shadowing someone in the department where you will be working. You’ll see firsthand what it’s really like to work there.

Learning how to control information

I admire how you are taking this one step at a time and learning as you go. You’ll get better at juggling job offers with time and experience.

It’s really no one’s business who else you’re interviewing with. It would have been better to conduct your search and negotiations without telling each company what you were doing with others. Recruiters might get offended, but they control information to their advantage all the time. They have no problem making an offer to their #1 candidate and stringing you (the #2 candidate) along until they get an answer from #1. They want to keep all options open, so they won’t tell you they’ve already made an offer to someone else.

Make sense? Controlling information (without ever lying) is what we do in business.

The book I referred to above tells a lot more about how to deal with job offers. In any case, I hope something I’ve said here is helpful. I would like to know what you decide and how this works out for you. Best wishes on your first job!

Is this job seeker being unethical? Is it ever okay to renege on a job offer? What other ways could a person handle this? And what about the appalled professors?

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Glassdoor Mud-Pit: Employees sued for negative company reviews

Glassdoor Mud-Pit: Employees sued for negative company reviews

Every employee’s worst nightmare, getting outed on Glassdoor, could become a reality


Source: FastCompany
By Michael Grothaus

You’ve left a company that you have legitimate grievances against. As thousands of others do, you go to Glassdoor to leave what you believe is a fair and accurate appraisal of your work experiences at the company. A short while later, you’re notified that your former employer has taken court action to out you, claiming your review breached the company’s severance agreements.

But this is no hypothetical nightmare; it’s what no fewer than 10 former employees of cryptocurrency exchange company Kraken are facing. As EFF (Electronic Frontier Foundation) Staff Attorney Aaron Mackey says: This litigation is designed to harass and silence current and former Kraken employees for speaking about their experiences at the company.

Nick’s take

Glassdoor built a mud pit. It has long profited from employees who enter the pit and sling mud — anonymous negative company reviews. Meanwhile, companies reward HR staff for posting fake positive reviews. (See also: Is wrong information being given out at Glassdoor?) Now companies are conditioning severance packages on no-mud-slinging (non-disparagement) clauses. It was only a matter of time until the splatter triggered lawsuits.

What’s your take?

Once they enter the mud pit, does anyone have a right to complain about getting splattered? Do you have a right to post anonymous complaints about your experience with an employer? Does an employer have a right to stop you from talking about its reputation — in exchange for a payoff in a severance package it gives you?



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Corona Crisis: How are you doing?

Corona Crisis: How are you doing?

In the March 17, 2020 Ask The Headhunter Newsletter we talk about how everyone’s doing in the time of corona crisis and stock market meltdown.


coronaNick, what are you hearing from your readers about the effects of the coronavirus and the stock market meltdown? There’s a lot in the news about companies suspending business, schools closing, curfews and people self-quarantining and working from home. (Working from home is going to be interesting since many companies have never been able to accommodate it!) But how is all this affecting jobs, job hunting and hiring, and how bad is it going to get?

Nick’s Reply

I can address this only anecdotally because I don’t have a lot of input yet from readers. I expect we’re going to hear a wide range of unexpected stories, and of course I have no idea how bad it will get.

Here are three personal accounts people have shared with me, in the order I received them. This is of course no indication of what you may experience, but I find it interesting that on the one hand employers are producing good job offers in the middle of the crisis, while on the other hand employers aren’t even telling workers whether they still have a job. On the third hand — it does feel like there are more hands in this than we’d imagine — employers are instituting hiring freezes.

Corona 1

Reader 1 says over the weekend she received a job offer for a senior management position that she’s “happy with” for $150,000 plus bonus, company stock and a good healthcare and retirement package. The interviews took a couple of weeks. She has submitted a few questions that she needs answers to before she accepts.

Corona 2

Reader 2 works for a 400-person professional office in one of the major U.S. cities that have been hit by the coronavirus. She commutes from outside the city and is reluctant to take public transportation to work. As of Sunday night, management has not yet informed employees whether they must report to work or whether they can work from home. She has no idea whether she still has a job and wonders whether she should leave a voicemail for her boss saying she’s not coming into the office on Monday.

Corona 3

Reader 3 has been unemployed for almost a year and is about to enter negotiations for a $95,000 position with a company he’s excited about working for. He has two concerns. First, he’s worried he may have to take a drug test — because he’s been using marijuana to alleviate arthritis pain — but doesn’t know whether he’ll be tested immediately or in a month. Second, he suspects the job may be withdrawn because the coronavirus “has business and investors all cowering.”

All three want to know how I think the corona crisis could affect their respective situations. The best advice I can offer them is: Make no assumptions and wait for the employer to take the next step.

(By the time I finished this column, Reader 3 notified me that the company put in a hiring freeze and went with an internal candidate “because he knows the material.”)


The worst thing to do during this crisis is make assumptions based on what “seems” to be happening in the world. The crisis will quickly separate well-managed companies from poorly managed ones — and responsive companies from indolent ones.

Please consider that you may not know what kind of company you’re dealing with until the pressure of the crisis actually hits it. I’ve seen seemingly inept companies and managers rise to the occasion and blow away all expectations, just as I’ve seen experienced ones crumble.

I think everyone’s best bet is to pause. Stay calm and learn all you can while watching closely before you act.

I don’t know, but you do

I’m not a good person to ask about the myriad impacts and effects of the coronavirus and stock market crisis. I expect things to get worse before they get better — but that’s not telling you anything.

In fact, I hesitate to tell you anything. I’d prefer that members of this community tell one another what they’re experiencing and what they see, and also offer suggestions to help one another deal with the great variety of problems and challenges we will face in the coming weeks and months.

Corona Crisis Questions

I’ve got a hundred questions but will leave it at this short list — and ask you not only to share any answers you may have, but to add more questions you’d like answers and insights about so we can all pile on to discuss.

  • Are employers still hiring?
  • Are you still working — at your company or at home? (Assuming you were not unemployed when this started.)
  • Has anyone lost their job?
  • Are employers requiring workers to take unpaid time off?
  • Are employers still interviewing and, if so, how?
  • If you’re job hunting, will you continue? How?
  • Has anyone received a job offer, accepted or started a new job in the past week?
  • Have any companies shut down their operations temporarily?
  • Have any companies gone out of business entirely?
  • What are companies and managers expecting of their employees?
  • Does your employer have a real disaster plan? What is it?
  • Have you (or someone you know) been diagnosed with coronavirus?

Most important:

How are you doing?

How you’re all doing matters more to me than knowing exactly what’s happening. I hope you’ll come back to this discussion again and again in the weeks (and months?) to come, to share how how you’re doing is changing, hopefully for the better.

Please share your experiences, questions, concerns, answers, insights, fears, hopes, advice — and lend your ears to one another. This is a big topic because it’s a big crisis. Feel free to vent; there are shoulders here to cry on. Best of all, there are friends that care about one another — and you can get as close as you like while staying back six feet.

All I ask is that we don’t turn this into a political debate or engage in rants about who’s responsible for the crisis and who needs to fix it — please use Facebook for that. Our goal here is to help one another through a very tough, unpredictable time. Our goal is to be with friends who care how you’re doing.

Love and best wishes to you all.

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Must I tell a new employer everything?

Must I tell a new employer everything?

In the March 10, 2020 Ask The Headhunter Newsletter a reader will need time off for a medical procedure soon after starting a new job. Must the new employer be told before the employee starts work?


new employerI tore my ACL playing volleyball. I just got over the hurdle of getting hired, but my new employer doesn’t know about my injury. I start next week and I am hoping to schedule my surgery in the next couple of months. However, I am not sure how to have this conversation with my new employer. Do I pretend as if the injury is new? Do I tell them that my surgery is already scheduled? I will be out for 7-14 days after surgery, although I am hoping I could work from home after the first 7 days. How do I approach this conversation? Any advice would be so helpful!

Thanks so much, I love your newsletter. It has helped me see my value as an employee and has helped me stop feeling weird about taboo subjects like pay. I tell all my friends about it when they’re having work trouble or are job hunting.

Nick’s Reply

Sorry to hear about your injury. This is really a decision you must make for yourself. I’ll try to give you a few things to consider.

What to tell and when

First, although you already have the injury, your surgery is not yet scheduled, and you have no idea when your doctor will be able to do it – so there is nothing firm you can tell the employer. You cannot in all honesty supply a date when you will have to interrupt your work. So, you start the job and, when the time comes, you notify your employer that you are scheduled for surgery and ask what the policy is for such a situation. You may find they are quite cooperative, especially if you volunteer to work from home while you recuperate.

I believe that as long as you accepted the job and agreed to a start date and you follow through, time off for a medical reason is not unusual – even if it’s so soon. You could start any job and get hit by a truck the next day – what then? I’m not trying to rationalize hiding information from the employer. I’m trying to emphasize that a medical matter should not play into a hiring decision, as long as you plan to do the job you were hired to do, and that includes helping minimize the impact on your new employer as reasonably as possible.

Do you have an ethical obligation to the new employer?

Second, the ethical consideration is not as clear as it may seem. I’m not sure whether this is really an ethical matter at all. I think it’s a practical one. Suppose you stayed at your old job and took the time off for surgery. That employer will have to deal with your time off. The point is, some employer will have to deal with it. Is it unethical to get surgery while at your present job? Of course not. So, why is it unethical to get surgery shortly after starting the new job?

You don’t have a choice about taking care of your health. It’s a reality that everyone that relies on you must deal with.

Now, you could give the new employer a heads-up before you accept and start the new job. I think your concern is that this may lead the employer to withdraw the job offer, right? Well, would that be ethical of the employer? If you were made a job offer because you’re qualified to do the job, how does two weeks off for a health issue matter? You’ll do the job when you’re hired, and you’ll keep doing it after you return.

I think this is really a matter of any employer – your current one or the new one – managing its employees. And that includes employees’ medical issues. It’s part of any business.

(For further perspective on a job seeker’s ethical disclosure obligations to a new employer, see Am I cheating on the company that’s interviewing me?)

Try the shoe on the other foot

Telling them in advance puts you at risk of losing a job you want. Telling them later may upset them. Either way, it will cost them work time. What’s worse in the overall scheme of things? I think the former is worse because it would deprive you of a job altogether.

Ethics are a fine thing to consider. But put the shoe on the other foot. If the new employer knows it’s going to experience a business downturn soon, that might result in layoffs, must it tell you this before you accept a job there? Perhaps – but I don’t think it ever would! This is part of any business, too.

(Here’s another good example of this “shoe on another foot”: Why do companies hide the benefits?)

Do what’s comfortable

“Telling all” in the hiring process is not necessary or prudent. I think the most important thing in a hiring transaction is to deliver what you promise – to do good work under whatever circumstances ensue. You may find the employer will take care of the cost of the time you need to take off for surgery by not paying you for that time, because you’re “on probation.” You’ll have to live with that, just as the employer must live without you for a short time.

So what’s the best course of action? Now that you have some things to think about, my advice is to do what feels right to you. I’d love to know what you decide and how this works out.

Thanks for your kind words about Ask The Headhunter. Good luck with your surgery. I wish you a speedy and complete recovery!

What does your new employer really need to know before you start your job? Is my advice ethical? What’s your advice to this reader?

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Should I tell my boss I might resign?

Should I tell my boss I might resign?

In the March 3, 2020 Ask The Headhunter Newsletter a reader who might resign may tread dangerously close to getting fired. This is the 800th edition of the weekly Newsletter since its inception in 2002!


resignI left a decent-size company for a start-up some time ago. Like any other start-up, the work requires a lot of hours. The work itself is very challenging and truly leading-edge technology. However, since the birth of my daughter, I’ve realized that I’m much more of a family man than I imagined. I can clearly see that the hours will only get worse as time goes on.

So, I’m considering leaving the job. My question: Do I wait until I get an offer to tell my boss? My current boss has been more than understanding about my personal life and fairly lenient when I was absent several days for family reasons. Rather than surprising him, I want to give him as much indication as possible before I leave the project. I want to say, at least, “I’m not sure this start-up thing is right for me,” as a passing remark without mentioning a job search. I might have left earlier, had it been a different boss. Thanks. I appreciate and enjoy your columns.

Nick’s Reply

First, you’re allowed to change your mind, especially about a career change like moving from a relatively stable company to a start-up.

Second, I think it’s wonderful that you respect your boss so much. After what I have to say, you may still feel you have good reasons to disclose your plans to your boss. But my first concern is not being nice to your boss. It’s to flesh this out in a way that helps you avoid a costly mistake.

Don’t get fired before you resign

Full disclosure isn’t all it’s cracked up to be. Use your good judgment and remember that some things are better left unsaid until it’s time to say them. Don’t get fired before you resign.

Ready to resign?

  • Don’t disclose where you’re going until you get there.
  • Decline to do an exit interview.
  • Don’t sign any non-disclosure or non-compete agreements.

Learn why and how in Parting Company: How to leave your job. Today’s Question originally appeared in this PDF book. Nick’s Reply is expanded here.

As long as you act responsibly and ethically within the generally accepted rules of business, my advice is to decide what’s best, and then act on it. Don’t feel guilty for wanting time with your family, even if it means earning your employer’s ire. Likewise, don’t feel guilty for protecting yourself from a serious potential risk.

I would not tell your boss that working at the start-up may not be right for you — not any more than I’d tell him you may resign. Any smart manager would interpret a passing remark that you’re not happy as a sign that you’re out looking for a new job. And that could hurt you. There are other ways to show respect for your relationship. For example, if you do resign, assure your boss you will leave your work in a good state for whoever replaces you.

Remember that until you have a job offer in hand, you’re not going anywhere. If you don’t get another a job offer, it’s all moot. But if you’ve told your boss you may resign and then don’t, you may find yourself fired.

It’s just business

Imagine what could happen if you tell your current boss your plans, but you don’t find a new job and he is forced to make a choice he doesn’t want to make. For example, suppose you go nowhere, and in six months your boss is required to eliminate one or more employees. You will have signaled that you want to leave anyway. That puts a target on your back. Remember that your boss, though he is friendly, has obligations to the company.

In another scenario, what if your boss feels obligated to notify others in the company about your possible plans? What if his boss questions your loyalty and orders him to terminate you?

Suddenly you could be on the street, and your boss could very honestly tell you, “Nothing personal. It’s just business.”

Planning to quit is also just business, and it’s confidential business.

Resign on your terms

I respect and admire your attitude, but you must ensure that you will always be able to care for your family. That comes first. Signaling in advance that you may resign puts you and your family at unnecessary risk. Resign on your terms; don’t get fired by surprise.

You can still show your boss that you value your working relationship. For example, when you get an offer you plan to accept, try to negotiate as long a “notice to current employer” period as you can. That’s what you should give your employer when you actually resign. (Caution: Even giving notice can blow up in your face.)

Your old boss must be prepared to handle this without rancor, and to accept this vicissitude of life. If he can’t accept it, you’ll be able to rest knowing you did all that was prudent to part on good terms.

This is a difficult situation, but you can handle it if you approach it as you would any tough work decision you have to make — responsibly.

Did you ever speak too soon before you resigned your job? What happened? Is it ever worth letting on that you are unhappy and might resign soon? How would you advise this reader?

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