So, a certain company in the market is trying to recruit qualified specialists. I won’t delve into the idea that the absence of a specialist in a company is not a diagnosis but merely a symptom. First and foremost, it’s important to understand why this particular company lacks good specialists in-house, or whether the issue lies with the specialists themselves rather than with the processes, product, or management, after all.
I also won’t reiterate that money doesn’t motivate people to work; it only motivates them to show up. The payment structure should be rationalized not only by management but also by the employees receiving the pay. They need to “buy into” the fairness of a particular payment scheme. Moreover, different companies have experience in luring people away with high salaries, but not achieving the expected results from them.
I will talk about the consequences of “symptomatic therapy.”
Consequence #1.
Motivation. When we hire a ready-made specialist from our competitors and set various tasks for them, we are essentially saying, “Buddy, go back a couple of years in your life and start over.” A good specialist grows. They feel cramped in the same position after just three years. What new things will they learn, what skills will they acquire by doing the same thing again? What will you offer them besides salary and bonuses? What will you do when they insist that “we need to do A,” while half the company says, “A is not our path”? How will you handle their experience and skills, which have become part of the unique selling proposition of their previous company? Will you apply them to yourself, playing catch-up with the leader? Will you reject them? Why do you need them? Can you “sell” them on the idea that your philosophy is better than your competitor’s? Finally, will you be able to retain them with something other than money, especially if you managed to lure them away solely for financial reasons?
Consequence No. 2
Market dynamics. Any company operates with a certain margin between the cost of resources and the price of the finished product. The revenue generated is spent on paying dividends to shareholders and reinvesting in the business. A business must grow and evolve. Stability is death. You and your competitors, as it turns out, develop at different speeds. The rate of development is positively correlated with the company’s profit. More profit leads to more growth, which results in even more profit. The market is tight, and sooner or later, the growth of some will come at the expense of others.
So, there is the labor market — a market for human resources. It is more or less stabilized and resilient, and certainly, work has a certain value. If you suddenly decide to pay even more money, it means you are cutting into your profits. As a result, the hired specialist, instead of helping to grow the company, will, in the long run, lead it to exit the market altogether. You lose competitive advantages compared to other companies that offer salaries at the market average, while they retain and attract talent through other, non-material and relatively low-cost methods.
Consequence #3 Speculation
Imagine that you are a skilled specialist. A competing company wants to have someone just like you—someone with the same experience and position, etc. It seems like a way to guarantee the qualifications and abilities of their future employee. They reach out to three recruiting companies at once. These companies start their search. The market is tight, and sooner or later, all of them call you. What do you do after the third call in one day? That’s right—you raise your price. From your perspective, you see the crazy demand, and your reaction is justified.
Consequence #3. Fear
A specialist lured away for money is very aware that they have been bought out and are being paid more than the market average. A smart person will quickly come to the conclusion that this situation cannot last long. They won’t see any prospects and, consequently, won’t work at full capacity. It’s also important to understand that such a specialist will be very afraid of losing their job. This means that their motivation will be dominated by fear. avoidance Failures against the backdrop of the drive for success. He knows very well that if he gets fired, he won’t be able to earn the same amount of money a second time. Is such a person effective? Can you be a tightrope walker if you suffer from acrophobia? Fear is a powerful motivator. The question is what this motivation is directed towards and whether it is productive.
Consequence #4. Turnover
Staff turnover is a frightening thing in every aspect. There’s no need to elaborate. (If you think it should be elaborated, let me know and I can break it down point by point). At the same time, it often snowballs like an avalanche. People, like herring in a school, one makes a move to the side, the next follows, and then the one after that. Even if we assume that the departing “valuable employee”—and they will leave, based on what I’ve mentioned—doesn’t take anyone else with them to their new company, naturally the most valuable one, the mere fact of one person’s departure will push others to leave as well. Just a little, but it will. And if someone is “on the edge,” they will leave, and you simply won’t have time to implement any motivating measures. When hiring people, make sure you’re bringing them on for the long haul.