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We all understand that people operate differently when they are compensated versus when volunteering. Expectations vary greatly, and the mix of people who will agree to participate in an activity (a job, a task, an initiative) will change based on how they are compensated.
Compensation can take many forms, from direct cash, status, practical benefits, relationships, or opportunities for self-fulfillment. The kind of compensation you offer also changes who will be interested.
In a time (2024) when many industries and organizations are concerned about staffing turnover and creating access to a broader base of individuals to join their teams, implementing direct cash compensation at specific points in the hiring process can be very beneficial.
At Creative Evolutions, we implemented the following two compensation elements to all hiring processes that we facilitate, from entry-level to executive roles. These represent one approach, but we encourage anyone to take these principles and create their own variations to transform their relationships across their human ecosystem.
Compensate candidates for positions
in real money after the first conversation or screening.
When considering how a team activity comes together, we are always thoughtful about the people who need to contribute and what it takes to support those people to show up, fully realize their potential, and deliver what the team needs.
In a hiring process, the candidates are the people who collectively do most of the work and provide most of the value. Hiring managers, recruiters, job boards, and others cannot accomplish anything without the candidates themselves. But many prospective employees feel taken advantage of by organizations, especially when they are asked to:
Go through multiple rounds of consideration that take significant personal time and energy, including the emotional impact of considering a major life transition and the potential impact of getting far along in a process and then not being selected.
Provide specific thinking around how they would approach a position - thinking that is high value and may benefit the organization directly, even if the person isn't chosen.
Incur risk associated with being considered for a position that could disrupt their current employment situation.
Require them to spend their own assets to be considered, including vacation days, goodwill of their references to take phone calls, and other practical costs.
As long as our approaches to hiring require these investments from candidates, it is significantly beneficial to pay individuals directly for the time and effort they provide to us. Here are a few specific tips:
It's hard to control how many initial applications an organization may receive, and giving candidates with non-traditional backgrounds an initial opportunity to speak to someone is important from an access point of view. Budgets are real, however, so setting a policy that you don't compensate for the application or first meeting can still be reasonable. You also don't want to incentivize people to apply just for money if they are wildly inappropriate for the role. After an initial materials review and first meeting screen, however, the responsibility shifts from the candidate to the hiring manager. All meetings, interviews, and materials requested from that point can be directly compensated and reasonably managed with a hiring budget.
The exact dollar amounts paid to candidates should vary based on the level of effort and expertise requested. Joining a one-hour Zoom meeting is a different request than flying into a city and doing a three-day gauntlet of meetings and presentations.
Generally, the amount paid to the candidate for their time should at least match the hourly rate you will pay the eventual hire x 2. For example, if you are hiring someone for a $100,000/year position, based on a 40-hour work week, that is about $50/hour. Asking that person to prepare for and do an hour-long Zoom interview is $50 x 2 = 100 x 2 hours = $200. This can be higher, depending on the level of expertise and high-level thinking you request from the individual. Note that this scales up and down - even if your organization has a very small budget and very low salaries, you can still pay something to your candidates - even for interns!
Compensating candidates can also motivate your hiring team to be focused and efficient. Having many rounds of meetings with candidates or considering many candidates into later rounds just for performative reasons or through being indecisive becomes far less likely when every meeting or request incurs a specific financial expense.
Track and compensate individuals who refer
or recommend candidates for positions.
The other place where crucial value is provided and goes unacknowledged in many hiring processes is with referrals and recommendations. Recruiters regularly request suggestions from active networkers and prominent leaders in different fields to find candidates for positions. Those leaders and networkers have spent real time and energy building those network and relationship assets, and as employment volatility rises, those assets are more and more valuable. Taking advantage of those in exchange simply for a good relationship with a recruiter or the good of the ecosystem is increasingly untenable.
Similar to paying candidates, budgetary realities make it challenging to pay people for every recommendation they might offer. Again, it is important to incentivize candidates and referrers to discern up front and not generate inappropriate suggestions or applications through compensation structures.
Regarding referrals and recommendations, one approach is to track all referrals and then have a compensation pool paid out to referrers if a candidate they suggested reaches a particular stage (like becoming a finalist). Because the intention is to reward the identification of excellent candidates rather than lucking into the actual hire, we recommend that this reward pool not be associated with a finalist or semifinalist round.
If possible, finding ways to reward people who regularly provide excellent leads, even if they don't make it to finalist rounds, continues to build the strength of your workforce ecosystem over time. Supporting and rewarding the value created by referrers builds your organization's reputation and the ease and success rates for future hiring processes, which should always be a goal of every hiring process.
What other questions do you have about compensating value-creators in a hiring process? Reach out to Creative Evolutions at any time and we're happy to elaborate, or help you explore utilizing these tools in your own teams.
Read More: "Centering Humanity in Executive Search" by Calida Jones
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