Times are changing
Let’s face it. This employment market isn’t what it use to be. Over the past handful of years, employers have enjoyed being choosy regarding available candidates. “They don’t pass all 10 of our skill requirements – don’t hire ‘em. Employee turnover – not a problem. How can our employees afford to leave? Our competition isn't hiring either.”

Not any more. This market is turning in the employee’s favor. Small and medium size companies are growing quickly and are having difficulty finding quality personnel. Larger organizations are starting those major projects that have been shelved for the past few years. My phone rings daily with clients in need of resources. Recruiters are becoming more selective in the searches they perform. Candidates are asking for more enticing “value packages”. These are all very good signs for people, companies, and the economy.

What’s an employer to do?
So how do you make sure your employees are happy and that you attract the best resources in the market? Money. Alright, that may be an exaggeration. There are several components to a company’s “value package” that aren’t financially related (e.g., responsibility, flexibility, training, growth opportunities). However, one of the most important criteria individuals place on whether they are happy with their job is their compensation plan. This does not necessarily mean people feel they need to make lots and lots of money. In fact, most people I've interviewed indicated they’re more concerned with the fairness of their compensation plans than the amount of money they earn.

Many companies are currently evaluating their compensation plans to determine whether their programs are fair and enticing. Last quarter, milewalk helped two organizations evaluate and restructure their compensation programs to keep their employees happy and entice new candidates. It’s insufficient simply to incent good performance. Incentives need to be aligned with corporate goals so they can help shape employee behavior. Compensation programs can be tailored to do this. (Please see the Complimentary Consultation section if you’re interested in discussing this further.)

Key considerations – The CORE traits
There are many quality compensation techniques. Regardless of which ones you deploy, they should ensure employees easily understand how they are compensated (i.e., no “trust me” bonuses), where they should focus their energy (especially important for sales resources), and which initiatives are top priority (management by objectives). Below are some universal traits found in successful compensation plans. These hold true irrespective of the employee’s level or compensation amount. I’ve coined them CORE traits.

Clarity – Every employee should understand how she is compensated. There should be no ghost formulas that produce a “magical number”.

Ownership – All employees should feel like an owner. It doesn’t matter whether the company size is five or 50,000 people or whether the company is public or private. There are appropriate techniques such as stock options, employee stock purchase plans, phantom stock distributions, and various profit sharing programs that can be implemented.

Reward – There should be a clear disparity between the amount of pay top performers receive relative to below average performers. Otherwise, why should the top performers work harder and take on more responsibility. Personal satisfaction goes a long way, but it does wane. Another company is always ready to lure your most talented and hardest working employees.

Essentials – Regardless of level, every employee should receive a blend of fixed and bonus pay. The best organizations also include some type of profit sharing even at the lower levels. The fixed pay (i.e., salary) includes the “good citizen pay” and covers the daily duties. The bonus should account for extracurricular and higher level of performance activity. At managerial, director, and executive levels, companies can also introduce management by objective (MBO) techniques to address the bonus portion. For resources such as sales executives, account managers, and other analogous resources, organizations should include commission-based plans.

Below are some examples of high-level MBOs that can be assessed for key departments within a company. They are generic and merely a few examples. They should be tailored appropriately based on your company type.

Too often, hiring officials associate paying a recruiting fee with paying for the person hired. This is certainly not the case when you evaluate the service the recruiter provides. The fee actually includes the total service that enabled the recruiter to produce the individual hired, often times much faster than a company can on its own. In the case of a contingency recruiter, you’re provided the ultimate guarantee – you only pay upon a successful search.

• Pre-qualified assessments of active and passive candidates
• Insight into compensation and benefits data for candidates within a particular discipline
• Job comparisons among organizations
• Open Communication

An experienced recruiter knows the market of qualified candidates and positions available in their respective disciplines. Since most recruiters see 15-20 candidates per week, they simply have a better assessment of the quality and experience level of candidates in the market. (This includes active as well as the scads of passive candidates they’ve cold called.) We also pride ourselves on maintaining on-going relationships with candidates.

Skilled recruiters pre-qualify candidates and compare them with each other. During the course of performing these comparisons, we gather data points regarding key tangibles such as salary ranges, compensation plans, and benefits packages. Because most companies hire infrequently, they simply do not have a good feel for the candidates available at certain salary ranges. It also helps that recruiters are often able to provide several qualified candidates sooner.

Market information can help more effectively position you as an employer. Our market knowledge helps us assess how your job positions compare with other organizations. We assess not only candidate qualifications but also evaluate job positions among organizations competing for the same candidates. This information is often valuable to our clients so they can re-calibrate their compensation structures and salary ranges if necessary.

The major reason why candidates accept a mere 50% of offers made by companies without the use of a professional recruiter is because communication between the company and candidate breaks down. Recruiters not only help interpret the needs of our clients and candidates, but more importantly, we communicate the needs and desires of both parties from an objective, non-threatening position. A major reason why milewalk candidates accepted 82% of offers extended this year is because we have acted as a third party “buffer” in communications. (To be completely honest, we’re disappointed this percentage is not higher. We contribute some of this to the fact that the market is becoming much more employee favorable and that employers are now just recognizing this. This is evident as candidates are rejecting offers due to inadequate compensation.)

Lastly, the average selection process without the use of a professional recruiter is nine weeks. During 2005, our average search was completed in four weeks. One main contributor to this significantly reduced timeframe is that professional recruiters constantly screen candidates. We also expedite the search by advising our clients and candidates throughout the selection process. Sometimes, it may be necessary to advise both parties to stop the process to ensure they do not waste more time. This is something that occurs much less frequently when companies interact directly with the candidates. We’ve found most companies treasure the fact that they did not waste any more time than was absolutely necessary, especially if the process would have been unsuccessful.

About the Author Andrew LaCivita is the chief executive of milewalk, an executive recruiting and human capital consulting company located in Chicago, IL. He has consulted for over 60 companies throughout his career and publishes this free newsletter to the human resources community in hopes it will help you attract the top talent and improve your ability to motivate your employees. After all, as Jim Collins indicates in Good to Great…people aren't your greatest asset, the right people are. For a more complete biography, please visit the milewalk website.
	Complimentary Consultation
	Thanks to those organizations who took advantage of our offer last quarter. We really enjoyed helping you assess your recruiting practices. This quarter, milewalk is offering a complimentary assessment of your compensation techniques. For more information on milewalk or to schedule a complimentary consultation, please email info@milewalk.com or call 847-685-2040.

Openings
For information on current job openings offered through milewalk, please visit our website.

Feedback
Your feedback is always welcome and very much appreciated. Please let us know whether you enjoyed this or how we can improve it. Send feedback to feedback@milewalk.com.

Subscribe
If you would like to subscribe to future issues of the milewalk insight, please send an email with your name and email address to subscribe@milewalk.com.

If you do not want to receive this newsletter you can unsubscribe by sending an email to unsubscribe@milewalk.com

Previous Newsletters
Past editions of the milewalk insight can be found here.

milewalk | Unique Insights in Executive Recruiting
911 Busse Hwy Ste 201 Park Ridge, IL 60068