Recent research suggests that Generation Z’s salary expectations now outstrip what many businesses can afford to pay. Today’s undergraduates expect their starting salary to average £30,244. However, the average, full-time wage for graduates three to four years into their careers comes in some way below that at £25,000 per annum.
This disparity isn’t restricted to Gen Z workers, either. Thanks to soaring inflation and the ongoing cost of living crisis, workers from across the age spectrum are feeling the pinch. This means that business leaders are in an increasingly tight spot too, with a need to remain competitive on salary to recruit the best talent, but with budget restrictions also a concern.
So, how can recruiters best manage salary expectations when funds are limited?
1. Benchmark current market rates
Before meeting with a potential candidate or sitting down with a current team member seeking a pay increase, take time to benchmark average salaries for the role across the wider marketplace. Reviewing job ads is a good way to get an up-to-date idea of what competitors are offering for similar positions. This should provide you with a clear idea of what your candidate or staff member could reasonably expect. While that won’t necessarily put that figure within budget for your company, it does allow you to go in forewarned about what may be requested, so you can prepare a reasonable response.
2. Ask candidates about salary expectations upfront
Leaving the question about salary expectations until your first face-to-face meeting means that you may already not be in alignment with that candidate. Be sure to ask about their salary expectations up front. A small disparity isn’t the end of the world, and negotiations and other job perks could bridge that gap. If you’re many thousands of pounds apart, you’ll need to consider whether there’s any room for negotiation. This is also another reason why it’s always advisable to include a salary on your job ads.
3. Be transparent
If your research has confirmed that your salary offer is slightly below the market standard for the role, be transparent about why that is the case. For example, if your business has specific salary bands, taking the time to discuss those bands and highlight opportunities for future advancement provides useful context, and could make the role more attractive to the candidate.
4. Be prepared to negotiate
Flexibility and a willingness to negotiate can stand you in good steed when finances are limited. While there will be an absolute maximum amount you can agree too, pointing out other perks such as health benefits, a handsome pension contribution or opportunities for professional development in the form of reimbursable training and further education can all help to move the needle in your favour.
Being flexible about what is and isn’t possible requires an open mind and a willingness to work with the candidate to find a mutually acceptable middle ground. The way you handle this initial conversation around salary can also set the tone for future reviews and pay rise requests, so finding a fair and reasonable negotiation style now will also help you to navigate salary-related issues in the future.
5. Don’t over promise
It can be tempting to over promise when funds are limited but you’re keen to be competitive and recruit the best talent. Over promising now can lead to frustration and disappointment later – it also promises to hit staff retention levels when your team members realise the increase they thought was on the table isn’t about to materialise. That’s not only bad for morale and your reputation, but it also means you’ll need to begin the recruitment process over again, negating the time and effort that has already been poured into finding a perfect fit and training that person for the role.
