I have encountered several situations where a client will make only a marginally better financial offer which gets turned down by the candidate. The client then might decide to up the offer, but the usual feeling of the candidate is that this is just horse-trading. If a candidate is worth a certain amount, the price must be right from the start.
Changing jobs is stressful at any level and if a candidate is headhunted the last thing they want to get involved in is negotiations so they will often just reject the offer and remain in their current positions.
Headhunted candidates are generally not looking for jobs at the outset of the process, so making a marginal offer, unless there is great upside, is not going to seal the deal. Not that the candidate should be lured by money alone, but the expectation is that not only will the new opportunity offer greater challenges but it will also yield enhanced earning potential.
There is always some risk attached to a career move, particularly with senior people - so the motivation to move should be a combination of the challenges of the new opportunity and the package. If one of these elements is missing, the allure of the new opportunity has only one leg to stand on and often does not sustain the 'load' associated with the move.
In addition, when a candidate receives a marginal offer, he will all of a sudden start examining the package breakdown in its minutest detail, as opposed to looking at the big picture of a good offer and great career opportunity.
The general trend is that a market related increase on packages where a candidate is headhunted is approximately 15 % on guaranteed package. At senior levels, the real upside is wealth creation potential of bonuses or equity, as opposed to guaranteed salaries and this is what is uppermost in senior candidates' minds.
The offer needs to take into account the increase that the candidate would be receiving at his current company; there is no use in making an offer which increases the package by 15% if the candidate will be getting a 10 - 12% increase within the next couple of months in any case.
Timing of bonus payouts is also a factor to take into account - for example, if a candidate is receiving a big bonus payout in the next 3 months, he will expect to be compensated for this if he is required to leave his current company prior to the payout. Some companies hold on to some part of the bonus as a retention strategy - this means that the candidate will be foregoing a portion of his earning - the new company should expect to compensate for this in some way in the overall structuring of the package.
Even though candidates at this level are likely to move mainly for the opportunity itself including the company, the future growth, the challenges, exposure etc, the money has to make sense. So, companies who make puny offers come across as having a bit of an attitude of 'take it or leave it' - which is completely inappropriate when they are, in fact, wooing candidates who already have good jobs.
I feel that to scrimp on the offer is a very short-sighted approach, and one that we can ill-afford in a skills short market.
