Paying Right at Market Rate May Impact Your Growth and Retention

Right now companies are experiencing the tightest labor market in years. Even knowing this, most are still trying to grab top talent for table stakes with average compensation, and competitors are winning out, just one of the many factors that led up to the Great Resignation. We’re pretty straightforward with our prospects and clients, that if you want to secure a higher caliber of HubSpot specialists, you will have to offer market rates at a minimum.

So if you’re prepared to search for skilled HubSpot roles this year, be prepared to go in with a strong offer, if not your best right out of the gate. With the Great Resignation ensuing, and talent knowing what they’re worth, touting below or just at market rates with candy-coated cultures and fringe benefits packages isn’t doing the trick. Strong cultures, remote work, unlimited PTO, excellent benefits, AND a salary commensurate to what the team member is worth is the new barrier of entry now that other companies have caught onto the progressive total compensation packages.

You may still be contemplating this argument, but also keep in mind that we are experiencing major inflation. The data is in, and the Consumer Price Index for all items year-over-year from November 2020 to November 2021 increased by a steep 6.8% after seasonal adjustments, the fastest-growing YOY rate since 1982. This is not even considering the unprecedented housing markets in many areas. Additionally, many organizations were unable to commit to merit increases or market adjustments during the peak of the pandemic, so prior to the inflation we’re seeing, there’s already ground to make-up.

Keeping rising standards of living factors in mind, it’s no wonder we’re seeing niche talent capitalize on the market, and making moves. 

The question then becomes, is your organization going to capitalize on this unprecedented labor market, pay up, and accelerate your growth?

What’s the Overall Cost to Your Organization? 

Short-term costs 

Did you know that an average search for a new hire is around $4,000 if you’re straining internal resources and the average search time is 42 days? And that’s lean. 

Consider how much you can protect your hiring team’s time, your cost-per-acquisition, and the timeline of your hires if you aren’t messing around with candidate bow-outs and negotiations? It’s hard enough in the current climate, and even under standard job market conditions to source and secure HubSpot veterans, much less also ensure they’re a culture, team, and company fit. By starting with a competitive compensation, you can stand out above the rest, secure more high-caliber candidates, and speed up the hiring process, saving you not only time and money, but on the negative impacts to your business of keeping that seat vacant. 

If you’re just at market rate, be sure to buffer more time into your already lengthy search timeline as you will need to comb through candidate’s salary requirements, and bake in time for negotiations. Gone are the days where we are seeing candidates come down on their requirements in a trade-off for a great culture or remote desk, so if you’re not shelling out upfront, do not be surprised if you lose out during the offer letter stage. Or be prepared to lower your expectations on skill level, and experience. 

Long-term costs

Have you ever had a time when your team was a well-oiled machine? When things were clicking, and deliverables were cranking through without a cog? On the flip side, have you had a few wrong-fit or under-qualified people fill a seat and slow down the productivity? We do not want that for you. When you’re budgeting for your next rockstar, do remember some of the long-term costs of lowering your candidate requirements for a technical role. It may take them longer to excel, and directly impact the growth of your organization as you wait for them to ramp up and rise to the occasion. Perhaps they will not have the full chops you’re looking for, and will make costly mistakes that impact lead acquisition or client retention negatively. So when you’re reviewing the budget for your upcoming roles, consider the skill caliber to dollar ratio, and what it could really cost you to come in with an average offer.  

What’s the ROI of Paying Up for Rockstars?

Let’s pause on the anecdotes, and throw some numbers at this hypothetical scenario. 

Say you’re looking to hire a Revenue Operations Specialist that is a wizard at HubSpot. Below is a breakdown of market rates for this role based on tenure*. Imagine the ROI of hiring a senior-level candidate at just $10k above market rate in this scenario over a mid-career candidate. 

Here’s how they can potentially impact the growth of your business quicker, and essentially pay for the salary difference:

• They possess a more proficient skill set in the HubSpot Hubs to streamline your operations, improve efficiency, and accelerate your sales pipeline. 
• If this senior team member is quicker to ramp, and can come in and make a swift impact, your net-new revenue should increase.
• The delta investment between the mid-level candidate and the Senior’s above-market base salary requirements may be anywhere from $10k to $30k more. In a 24 pay period annual cycle, that equates to $415-$1,250 more in wages (before increased taxes), or $830-$2,500 a month. 
• If just one deal size is as little as $6,000 in monthly recurring revenue, and their work helps to secure an additional deal a month due to their contributions in sales process efficiency, they’re paying for their wage delta 2x over conservatively. So don’t be too quick to redline your hiring budget.

Even if your roles aren’t directly contributing to revenue generation as such in this example, consider the downstream impact to your organization's growth the role may have, even indirectly. Say you’re an agency, and you pay up for a Marketing Strategist that’s not accountable for up or cross-selling. But they bring the ideas, and they bring the results. How are they securing dollars down to the bottom line with client satisfaction and retention? What if a junior candidate made a misstep with a client, or whose ideas are only contributing baseline results? Will those tough customers hang on long enough for you to justify that role, or even that pod?

Creative Ways to Meet Candidate Salary Requirements

Now we know that budgets may be hard-set, and that the economy is impacting businesses as well, so offering above market rates may be difficult. Here are some creative ways to meet your ideal candidate where they’d like to be, but still ensure you’re protecting your bottom line:

• Consider a one-time signing bonus that will bridge the gap between market rate and their over market request, buying you time to analyze their performance and wait for an in-cycle merit review to address future years. Add a retention clause or split the signing bonus up to include a 120-day retention bonus so your new hire has to bring their A-game to secure their additional monies.
• For smaller companies or ones with less red tape, consider discussing a company-wide bonus program.
• Offer an initial base salary of market rate with an increase to their desired base pay after X days or X periods of hitting or exceeding their KPIs.
• Steal some creative ways to compensate from traditional sales roles. How can you assign growth-based KPIs to each role, even if not revenue generating, in which achieving can unlock additional pay? Brainstorm other compensation plans and put a spin on things like On-Target Earnings, Draws, Spiffs.
  
  

What’s next?

Regardless of the position you’re looking for, paying market rates are here to stay. You need to start anticipating and planning around this to make sure you have the expertise on your team needed to grow your business. But rates still aren’t the only factor candidates are searching for. You will still need to sell the opportunity to your top candidates in order to close the deal; remember, candidates are being selective, and fit is a two-way street.

If you’re in need of support to beat out the competition for talent, we’re here to help when you’re ready.  Our recruiters serve as your advocates, and will help sell your company, culture, and total compensation to each candidate we present. 

To take planning for your next search even further, be sure to download our 2021 HubSpot EcoSystem Salary Guide for community-relevant market rates and baselines for the most critical roles.