In the February 7, 2017 Ask The Headhunter Newsletter, a reader marvels at employers who discount job offers to save money.
I worked as an intern while in college, and after graduation they offered me a job. It was my first experience negotiating higher job offers. I discussed my proven performance and gave examples that demonstrated my value. The employer granted me the higher salary.
My advice to others is to capitalize on your value and have the courage to negotiate for what you think you’re worth. Of course, your value may not be viewed as high as you think. That’s okay. Just weigh the pros and cons of the position along with your needs and make a decision. Either way, keep in mind, it’s up to you.
But here’s what’s interesting. After I accepted the position, I went back to the hiring manager and asked why he offered a lower salary to begin with. He responded, “If you had accepted the lower salary, I would have saved $3,000 a year.” What do you think of that?
It’s astonishing is how casually the hiring manager responded that he’d save money if you had accepted a lower job offer. On its face, that might seem like simple market economics. But there’s a profound fallacy underpinning the manager’s behavior.
Salary is not an expense to a company, though that’s how accountants portray it, and everyone accepts that. What a company pays you is an investment. And that’s not semantics. A company buys a piece of equipment as an investment against an expected return — and capitalizes it. An employee is capital, too — the employer expects an ROI (return on investment). The fallacy is that an employer can save its way to higher returns by making lower job offers.
Of course, with machines or people we want to pay less to maximize our ROI. But neither is simply an expense.
The value of higher job offers
All my life as a headhunter I’ve encouraged my clients to offer a desirable job candidate more than the candidate asks for or expects. The reason is simple.
Unlike machines, people perform better when motivated. So, when a candidate expects $75,000, offering the candidate a totally unexpected $78,000 triggers an incredibly valuable response: enthusiasm and motivation. Even gratitude. For an extra 4% investment, the employer will likely get far more than a 4% higher return.
However, when they offer less, I think employers suffer with a far lower ROI than the salary savings might suggest. (Maybe you’ll argue with me; that’s what the comments section below is for.)
Managers like your new boss may think they’re being rational by offering less to save money. They’re missing an opportunity to get a higher return. Salary isn’t an expense. It’s an investment. Done right, investing more returns more.
(See Goodbye to low-ball salary offers.)
Why employers hire
Remember: We’re saying the employer really wants to get that very desirable candidate on board. (What other kind of candidate would the employer hire?) So why not maximize both the chances the candidate will accept the job and the potential return by making a higher job offer to prove it?
Nobody ever worked harder or more enthusiastically because a company low-balled them.
But I don’t want to skip over the reality. I parenthetically asked what other kind of candidate an employer would hire, if not a very desirable one. I think much of the time employers hire like they’re checking off boxes and plugging holes in leaky companies. They aren’t thinking about boosting the bottom line by making a really good hire.
And that’s why they see no value in higher job offers, but are proud of saving money when candidates accept lower offers.
In my book, Keep Your Salary Under Wraps: How to say NO when employers demand your salary history, to make them say YES to higher job offers, I quote an HR manager who sent me an astonishing complaint about my advice that job seekers should never disclose their salary history. She said:
“Employers want your salary information because they believe that if you apply for a job that starts at $50,000, but you made $30,000 in the same sort of job at your last company, they’d be overpaying. They’d want the opportunity to buy you for $35,000 to start, saving them $15,000. The HR person who does that gets many kudos for their shopping moxie from their boss, and gets to keep their job and go on many more shopping trips.”
Many managers don’t hire to make more money for their companies. They hire to save money for their companies by using less of the hiring budget. As if the purpose of the hiring budget was to save it!
I believe treating salary as an expense makes it far easier to hire and fill jobs. If the outcome of hiring and filling jobs were measured on ROI, most HR managers and hiring managers would be fired.
I wonder how many CEOs and boards of directors realize their accountants and HR departments are saving their way to higher profits!
I realize your main point is that you succeeded in getting a higher offer not by just asking for it, but by demonstrating your higher value. Nice work! (See The ONLY way to ask for a higher job offer.) Your story delivers a valuable lesson to others.
But I was tickled by your new boss’s suggestion that if he’d paid you less he’d have saved money. My guess is you’ll work harder than the extra three grand cost him — and he’ll make more money.
Am I nuts?
Why should anyone pay a job candidate more than they ask or expect? Is a candidate really more likely to accept a slightly higher offer? Will a bit more money motivate better work? I can’t prove it objectively, but I think yes.
What do you think? Does that little boost in an expected job offer pay off? Is salary an expense or an investment? Has an employer made you a bigger offer than you requested or expected? Did that make you more productive?