Staying on or under budget on a construction job without sacrificing quality is an everyday goal for most contractors.  The same is true for hiring new employees.  

Some hiring managers have the false impression that they’re saving their employer money by making low-ball salary offers. But, frankly, the opposite is true.  Below, I’ve outlined the reasons you should avoid low-ball offers:

 

You need top talent to remain competitive. In fact, research suggests that "A" players are worth many "B or C" players. These high performers know they have options.  And most of the time, these candidates will be so offended by a low-ball offer, they won’t even attempt to counter. That means you’re not only losing out on top talent, but you’ve lost the time and money you invested in recruiting that individual.

 

 

Remember, during the first 90 days of a candidate’s employment, they’re still likely receiving offers. If they find out they were low-balled, the risk of leaving is high. Even if they stay, they’re easy targets for being recruited. Recently I met with an executive at a national contractor who admitted he low-balled an offer to a General Counsel. He simply wanted to show the CEO he could come in under budget on that hire.  This candidate accepted the offer, but resigned two weeks later with a fiery resignation letter. The time and money invested in recruiting someone was lost.  Also, the situation created "bad press" for him with the CEO.  

 

 

As you know construction is a small world, even in a big city like Chicago. People talk, but nowadays, people also post!  Low-balling stories get around town and could generate negative reviews on sites like Glassdoor. This hurts your ability to attract top talent in the future, creating further loss.

 

Even if candidate doesn’t leave in the first six months, they may cost you money.  Research shows, when people feel cheated on compensation, they give low-ball effort for low compensation.  In some cases, they may even justify theft.  

Compensation is tricky in a low unemployment market.  Salary surveys such as those available through PAS and FMI. But, as I mentioned in an earlier column, be sure to ask on the front end what the candidate’s expectations are to make a move. Also, consult salary surveys and check with your industry peers.