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The (big) difference between market rates and the rate you want

The year 2022 has seen an unprecedented shift in salary expectations from candidates across many job functions, not least because the stories of organisations being willing to pay these new expectations seem to be everywhere.

Small to medium sized organisations seem at a loss to compete for talent with their traditional blue chip employer competitors.

It’s not uncommon to hear candidates asking for 40% more than they were earning last year, either on the permanent or contract side. For example, there are mid-level BAs asking for $180k salaries, often just because these people hear that they can get them.

And with inflation increasing, house prices spiralling out of control, and the cost of living becoming almost impossible to keep up with, who could blame them?

What does this mean in the long term?

The knock-on effect of these changes for businesses is clear; operating cost expansion, profit/shareholder return compression, not to mention the myriad of parity issues present across existing, loyal, and often longer-term team members when new people come in with these huge premiums.

The other problem is that the expectation in those environments, who are willing to pay, is just crazy too. Candidates aren’t really considering this before they make money-first decisions.

People are working very long hours, under huge pressure with much fewer resources than might otherwise be necessary just to justify the big salary.

Can this benefit your career and what should you expect?

It’s true that the open borders have not yet lent themselves to an influx of immigrating talent, and that many job types in the Data Analytics space – particularly in financial services – demand pre-existing local legislation knowledge and hands on experience. That creates the ideal seller’s market for very experienced candidates and contractors who can “hit the ground running” and are mainly interested in maximising this earnings window.

But for organisations, the reality of paying someone 40% more than you had to pay them last year is that you probably need them to do 40% more work to be as productive, so that individual had better have all the skills and more required to do the assignment.

The reality here is that market rates are like a house auction. Your value in the market on the day you accept a role is not necessarily what you want it to be, it’s what someone is prepared to pay… Except in this instance, the expectation is going to change dramatically based on what that number is in terms of your productivity and contribution.

Here are my top strategies for ensuring the right match between expectations and outcomes in the salary discussion.

For hiring organisations

  1. Be clear about the reward rate from the start of any recruitment process

  2. Be open about your ability or willingness to pay an excess and what you will be expecting in return for that premium

  3. If you can’t or won’t budge, be clear about why a candidate would choose to work for you rather than reach an earnings peak elsewhere. Often purpose and flexibility are the keys here as they are most often absent in the highest paying roles

  4. Place a value on your benefits package. Several organisations have a sum of money that can be allocated to benefits that can be customised to the candidates’ personal preferences and circumstances

  5. Ignore any advice from “salary surveys” that are more than about a month old

For candidates and job seekers

  1. Be upfront about why you are asking for the rate you are asking for. If it is opportunist, also be prepared for what else you are prepared to do for that rate as nothing in life is free!

  2. Be negotiable – most clients can and will incentivise you to join, you just might have to meet them halfway to get your dream role.

  3. Be decisive – once you are interested in a role, commit! it will give the hiring organisation more confidence to negotiate with you to get a mutually beneficial outcome, certainly more so than putting yourself in an auction scenario for the highest bidder ever will.

  4. Be clear about how you value/price various benefits and the type of organisation you work for. Is an extra $10k of salary worth the additional commute, or losing the ability to pick the kids up from school? The money often disappears but the benefits can change the way you feel about working for a company.

I am currently working on a number of roles within the Melbourne data world. If you are interested to find out more, contact me today for a confidential chat.

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