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3 Recruiting Pitfalls That Can Increase Employee Turnover

In today’s highly competitive talent market, many employers are inclined to do what it takes to speed up the recruiting process and make their organization look as attractive as possible. Where organizations run into trouble though, is when they rely on recruiting techniques that focus on making special cases for individuals or for groups that don’t match the experience in the rest of the organization. Here's how short-term recruiting tactics can lead to employee turnover in the long run.

This blog post offers a sneak peak into our upcoming ebook “Your Recruiting Ecosystem: Managing the Employee Lifecycle”, which was developed in collaboration with BambooHR.  

As you bring on new employees, are you making promises you can’t keep?

SHRM estimates the average cost-per-hire at $4,129, a number that only increases the longer a requisition remains unfilled and consumes resources. In today’s competitive talent market, it’s tempting to focus on recruiting as a series of one-time transactions: find the people who have more skills and experience, make the right offers, beat everyone else in time-to-hire and compensation, and you win.

But like many other victories, what happens in the recruiting process can make all the difference in what happens next year. Focusing on narrow recruiting wins can lead to hidden flaws in your new hires’ experience with your organization, flaws that lead to employee turnover and poor performance in the following months or years.

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Yet, in today’s highly competitive talent market, many employers are inclined to do what it takes to speed up the recruiting process and make their organization look as attractive as possible. Where organizations run into trouble though, is when they rely on recruiting techniques that focus on making special cases for individuals or for groups that don’t match the experience in the rest of the organization.

Below, we’ll discuss three common recruiting habits related to salary offers and explore why they ultimately hurt your organization in the long run.

Short-sighted recruiting practices can lead to a toxic culture, because they create unjustified pay disparities amongst your employees that will eventually come to light.Click To Tweet

RecruitingPitfalls_Goldenhandcuff

  1. The Golden Handcuff Strategy

The golden handcuff strategy is recruiting speak for offering a salary that’s well above the local market to keep existing employees from quitting or offering potentially lucrative stock or bonus incentives that occur in the future. These salaries are often offered as compensation to “make up” for a poor working experience (i.e. pushing employees to work long-hours on a prolonged basis).

On the surface, it seems like this strategy can free an employer from experience-related issues. The thought process goes something like this: “You don’t like working here? Well, you could try going elsewhere. But you like your current standard of living, right? Wouldn’t be too bad if you couldn’t maintain it any more?”

For  higher-level positions, golden handcuffs compensation is sometimes tied to legal agreements like non-compete clauses and stock payments.

  1. Haggling

Of course, not all recruiters have the resources to extend offers at the top of the salary range, but nearly all recruiters face the pressure to reach outside of their normal range to land a promising candidate. It could come as sweetening the deal when a choice candidate asks for more money, or it could come as haggling when a favored candidate has requested salary that’s over your recruiting budget for the position.

This haggling — or asking if someone would be willing to accept less — can be a trap because if you’re not careful, you may end up with a whole department where everyone is overqualified and paid at rates that are way above the market.

  1. Buddy Inflation

Another recruiting tactic that is sometimes used is known as “buddy inflation”. It is when a salary offer is made based on friendship and persuasion rather than trustworthy salary data sources.

Sometimes this artificial comp mismatch is extended to an entire department, because the department has persuasive managers who made a case for bigger recruiting budgets. Perhaps the lead developer is great friends with the CFO, and said to their CFO “You can’t get a developer for less than six figures.”

How Short-Sighted Recruiting Tactics Cause Long-Term Harm

employee-turnover

However it happens, when comp gets a one-time shift to accomplish a recruiting goal, the consequences will catch up with you. This is because employment and compensation isn’t a one-time deal revisited every other year, it’s an integral part of the employee experience, one that more and more people are sharing with their friends, co-workers, and the world at large.

Short-sighted recruiting practices can lead to a toxic culture, because they create unjustified pay disparities amongst your employees that will eventually come to light. If men are more successful at arguing for salary increases than women, or if you only use referrals to fill the top-paying positions and end up with a group of the same race and gender, then you’re going to be looking at damage to your reputation, if not legal actions.

But most importantly, with these pay disparities, you’re going to set up unfavorable comparisons in your employees’ minds. And what happens when your employees start to compare themselves to their peers? Job-hunting activity jumps.

When Are Employees Most Likely to Job-Hunt?

Harvard Business Review examined research from companies that tracked their employees’ behavior to see if they wanted to leave their jobs. They hired analytics companies to develop a “likely to leave” score, using a sophisticated analysis of workers’ electronic footprints. This included monitoring behaviors such as checking LinkedIn multiple times on a company computer, analyzing social media posts and contacts, and badging in and out of the parking garage at odd hours (potentially to head to interviews).

Analysis of this data showed that employees are:

  • Six percent more likely to quit after a work anniversary
  • Nine percent more likely to quit after the anniversary of their most recent promotion
  • 12 percent more likely to quit after a milestone birthday (30, 40, or 50)
  • 16 percent more likely after a peer gathering such as a high school reunion

Life milestones like these are often accompanied by epiphany moments—moments that leave us reflecting on our life choices, including our current job situation. If your employees have an epiphany moment and realize that their compensation isn’t aligned with their contribution, or that their experience at your organization doesn’t align with what they want in their career, then there’s a real danger that they will decide to leave your organization.

You can’t prevent every unintended consequence of your pay strategy. But developing a consistent, data-based compensation plan for your organization can make all the difference. It’s the first step to showing your employees that you’re dedicated to providing a healthy, balanced, and fair work ecosystem where they can do great work today and improve their skills and life situation for tomorrow.

Want to learn more about how to develop a robust, compensation plan? Check out our white paper Define Your Comp Strategy  

This blog post offers a sneak peak into our upcoming ebook “Your Recruiting Ecosystem: Managing the Employee Lifecycle”, which was developed in collaboration with BambooHR.  

Tell Us What You Think

Do you have examples of recruiting tactics that organizations should leave behind? Share them with us below in the comments or on Twitter.


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