Hiring top talent : Decoding the market value

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Finding and recruiting the right talent for the right role is never easy. According to Statista, tight talent pools and economic uncertainty continued to be two of the biggest challenges in hiring in 2023. Getting the right talent requires the consideration of multiple aspects of hiring. However, one of the biggest one is to determine the right value for the potential talent.

What is a talent worth?

At least two factors influence how organisations and hiring managers determine the value of a talent. One is internal parity within the existing organisation. Parity with existing internal pay scales is key to avoiding disruptions in hiring patterns or compensation structures within the organisation.

For instance, even as organisations grow, certain internal compensation structures may have been arrived at, which could be less than the market value. This can influence a potential talent’s value, especially when you are recruiting someone with a proven track record in their previous organisation or industry.

Secondly, external factors such as market conditions also influence the value. For example, how much do competitors pay for a similar role? Also, how is the industry performing overall?  

Thirdly, it boils down to an organisation’s ability to afford a certain salary for the given role. This is truer for a top talent such as a proven ‘rainmaker’ whose market value could be significantly higher than the existing top performers within the organisation. The affordability gap between what organisations can afford and the current value of a top talent can have a huge impact on hiring.

The affordability gap is one of the classic dilemmas that human resource (HR) managers and CEOs face while hiring top talents. Even in scenarios where CHROs and CEOs can afford it, there is a possibility of creating internal disparity within the organisation among the incumbent workforce. This scenario often gets even more stark during a strategic hire, when organisations need to make informed decisions before committing to a higher budget.

Arriving at the right compensation

Compensation research is a crucial step in determining the value of a top talent. Organisations can use the services of third-party agencies that can provide access to established databases to research compensation trends of a particular role or competitor. With the help of such agencies and backed by reliable information from executive search organisations such as Crest’ XO, CHROs can return to the hiring process with much clarity.

For instance, if market data hints at compensation levels of $1 million, then CHROs can determine, based on their organisation’s internal structure, external factors, and affordability, whether they want to cap hiring levels at $800,000-$1,000,000. This is mostly for small and medium-sized organisations, rather than large organisations which can afford to be flexible with their hiring budgets.

Narrowing down the search

Further, Executive search companies can help organisations narrow down the list of suitable talents by sharing information on the current market conditions, salary range, and talent expectations with the CHROs. With this newfound market data of $1 million per annum compensation, CHROs and CEOs can ask their talent search partners to restrict the search to talents falling under the $700,000-$800,000 bracket based on the abovementioned factors.

Roping in executive search partners or agencies can help organisations prepare potential talents for the compensation range and roles, among other things.

Of course, such agencies can also help organisations play the balancing act by ensuring that potential talents can openly share their compensation expectations without fear of repercussions or being perceived negatively, thereby hampering their prospects.

Determining the market value

Finally, talent search agencies, organisations, and CHROs can determine a talent’s true worth based on such internal and external factors. However, achieving the optimum value also entails considering the potential top talents’ years of experience, achievements, deliverables, and career growth trajectory.

Moreover, while determining the approximate compensation range for the position or budgeting for the position, organisations may have to consider factors like industry, type of organisation and size, among other things. However, there can be scenarios where relatively smaller organisations can shell out a premium for a deserving talent.

Eventually, the industry, the organisation from which the top talent comes, and, most importantly, the demonstrated work and achievements in their career determine their market value.

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