By: Elias Cobb, National Recruiting Manager at Quantix, Inc.
Can someone explain how these scenarios make sense:
1. Company ABC has John Q. Developer working there, making $75,000. John Q. Developer feels he deserves a raise, given his longevity, and because he is getting calls from other companies and recruiters offering in the neighborhood of $90,000+ for the same job. Company ABC either declines to give him a raise, or offers him a nominal raise. John Q. Developer quits, getting $90,000 at his new company. Company ABC opens a new position, and hires a new developer at….you guessed it, around $90,000 BECAUSE THAT’S WHAT THE MARKET WILL BEAR. Yes, I mean to be “yelling” that. Now the company has lost all that knowledge and an employee whom they know and trust, and saved nothing.
2. Company XYZ is hiring a QA Engineer. They are offering a salary of $80,000 for the position. Two people apply. Susie Tester, making a current salary of $75,000, with four years of QA experience; and Mary Quality. Mary is admittedly underpaid. She has been at her current employer for over eight years and moved into QA five years ago, but never really got a raise commensurate with moving into IT. She is making $55,000. Both testers are asking for $80,000, because, well, you guessed it – that’s what they’re seeing on the market. Company XYZ interviews both, and realize that Mary is a better fit. She has better skills, and is a better culture fit. But they offer her $65,000. Why, you ask? Well, because they can’t authorize a raise of $25,000!! She should be delighted with a $10,000 raise (insert sarcasm). So Mary turns it down because there was another company with some foresight who paid her $80,000, because THAT’S WHAT THE MARKET WILL BEAR. Now Company XYZ has Susie Tester, whom they didn’t like as much, or they have to restart the entire hiring process. They end up hiring someone else, for the exact same $80,000 they would have paid Mary anyway, and taking an extra six weeks to fill the position.
Seriously, can anyone explain these to me? I’d really like to know why this happens, because I can’t for the life of me figure out why either scenario makes any sense.