Where does remuneration fit into recruitment?

This article was published in the October Issue of New Zealand Management Magazine.

Disclosing the remuneration range when advertising a position may encourage more high-quality candidates to apply.

Defining a remuneration range before advertising a role promotes transparency and equity right from the very beginning of the recruitment process. This should therefore be one of the first steps an organisation takes when planning for a recruitment assignment.

In order to arrive at a level of remuneration the organisation feels they can afford and that will encourage applications, companies should consider a number of factors:

• Organisation affordability: Those involved should look at the department budget, how much they can afford and what level of flexibility there is for the right candidate.
• Market competitiveness: Organisations need to identify if they are recruiting in a highly competitive market and know what the market rate is for the position.  If there is a skill shortage in this area, the company may have to pay more to compete.
• Internal relativities: As well as what the department can afford, businesses should also look at the internal relativities within the organisation. A position should be remunerated relative to where it sits within the organisation structure and fairly against other similar roles. 
• Organisational need: Recruiters may also want to consider how critical the role is to the organisation. If it is a critical role, is the organisation prepared to pay a premium if necessary?

Why should Remuneration be communicated to job candidates?

Disclosing the remuneration range when advertising a position may encourage more high-quality candidates to apply. Potential applicants may be unaware that the organisation offers an attractive remuneration package – whether it’s a competitive salary or other types of benefits – or that the role is the step up they’re looking for.

Having a remuneration range instead of an exact figure is a good idea so that there is room to negotiate when it comes to the right candidate. Where organisations pay within that remuneration range comes down to what the previous experience candidates bring as well as the internal factors discussed above.

Discussing remuneration expectations early in the application process also prevents organisations reaching the final stages of recruitment and finding that the remuneration expectation of their preferred candidate is not in line with the organisations. This avoids both parties wasting time unnecessarily.

Whenever and however remuneration is communicated, it’s important that organisations explain the Total Employee Value Proposition (TEVP).  The TEVP is the full reward offering for the role and includes monetary and non-monetary benefits. It is important that all components of the remuneration package be communicated as this could make all the difference to the right candidate. Explaining this up front may ensure the best applicants continue through to the final stages of recruitment. Monetary extras may involve a company vehicle, KiwiSaver, bonus schemes or commission-based payments. Non-monetary extras could include flexible working hours or further training and development.

Below is an example TEVP which details both monetary and non-monetary benefits.


Remaining flexible with remuneration

Where organisations cannot meet an applicant’s salary expectations, having an open conversation about what type of reward, both monetary and non-monetary, would make the offer more appealing, can help to secure the best candidate.

If affordability is an issue, organisations should consider what non-monetary offers they can make. For example, in industries where training is required, providing time within the work week to complete assignments could be appealing to applicants. This shows that the organisation is willing to help upskill their employees.

Determining remuneration before the recruitment process begins may ultimately encourage more applications or help in securing the right candidate for the role.