People strategy is one of the top places we see businesses get themselves in a bind. All too often when we talk to companies about the issues they’re having, they say they’ve made promises to employees that they can’t fulfill. Or, in some cases, they made those promises and delivered on them to the detriment of their company’s finances.
We’ve also talked to employees who’ve been promised a future raise in their initial offer letter and never gotten it, or people who haven’t been paid what they expected, or people who’ve been given responsibilities far outside the scope of their original position.
When that happens, you wind up with a lot of dissatisfaction. Mismatched expectations will do that. In most cases, employers aren’t being intentionally malicious when they do these things. They really do want to offer that raise but then discover they don’t have the budget to do it.
There’s a pretty straightforward way to avoid this problem: know your numbers.
Make it about the company, not the individual
You have to know your numbers when it comes to people strategy. If you’re hiring a new team member or filling a vacant position, you have to know what the position should be paid now and how much you’ll need to increase it over time to retain that employee.
Businesses often overpromise in the moment to lock in their favorite candidate instead of knowing what they can actually afford. You’re making deals on the fly, which ultimately creates unwritten policy and an unsustainable pay structure.
We often make it about the individual. In business, it can’t be about the individual. It has to be about the business, and it has to fit your business model and your budget.
Do the research
When companies adapt things in the moment and overpromise to lock in a candidate, it usually comes back to bite them later. The better more sustainable approach is to do the market research based on a detailed job description to determine the current market rate for that role. Then factor in the cost of benefits on top of the salary range you’ve determined. That’s how much you can afford in order to hire that employee.
That salary number isn’t going to work for every candidate, and that’s okay. If the number you can pay doesn’t work for them, then move on to the next candidate until you find one that fits both your culture and your budget.
Running the numbers can be a frustrating process for many business owners. But you have to do it.
Look at other things to negotiate
Money isn’t the only negotiating tool you have. Sometimes you can make a job offer more enticing with benefits, including some that have a softer cost than salary. Maybe you increase PTO time, start matching 401k contributions sooner, or perhaps offer remote work a few days a week to save that employee time and gas money.
If you focus your negotiations primarily on salary and end up overpromising but underdelivering, you’re probably going to lose that employee anyway. And then it’s going to cost you more time and effort to replace them. Know your numbers up front and develop a people strategy with the numbers in mind to build your team. It works out better for everyone in the long run.
If you need help developing a people strategy with numbers in mind, reach out to us today to start the conversation. We can help you navigate the process and develop a plan.