Presenting a pay plan that will get accepted
By the time you get to offering the position to a candidate you should know what it will take to get the candidate onboard.
Trial Closes: During the interview process we ask trial closes to gauge a candidate’s needs such as: “We are interviewing several good Sales Manager candidates and the pay range they are looking for around $150K all in with a base salary of $85k.” “ How does that align with your needs?”
If we are way off let’s find out now. Perhaps you cannot afford this candidate or maybe you need to find a way to stretch your budget to bring her aboard.
Perhaps the candidate communicates: “$150k is what I am looking for but I have a $95K base salary now and I don’t want to go backwards in salary”. There should be no surprises when you offer a pay plan to a candidate.
Understanding the variable : For most candidates, there is a direct relation to their comfort level with the variable proportion of the pay plan to the amount of base salary they need. If a candidate isn’t certain how much they are likely to make with the variable portion they will want more in salary. Over the years we have seen companies get irritated with a candidate, thinking that they are offering a terrific pay plan where the candidate can make a significant jump in total income because of the generous bonus or commission plan. However (and this in very important) if the candidate does not understand the bonus plan they may be mentally plugging in the wrong numbers and seeing the pay plan much differently!
Simple Solution : When making the offer explain the pay plan. Then show what this pay plan would yield based on the previous 12 months. This will be an exact number. Then explain that “We are not bringing you on to keep things at status quo.” “ We want to see a 15% increase in sales.”
Then show them what the pay plan will yield with:
- modest increase of 10%,
- hitting target of 15%
- and if candidate outperforms target and hits 20% increase what will they earn.
Take Away: The better the candidate understands the variable portion the more likely he will accept your offer. So, take the time to explain it !