The Accounting Department Manager, Maureen, shared with an Abel Personnel recruiter a common predicament in the business world. “We posted the position of staff accountant for four weeks. We
need to replace some recent departures plus meet growing demand. Those applicants that were qualified wanted to work from home or flexible hours. Those that were willing to work a standard 40-hour week needed salaries above our pay scale.”
The Tight Market Pay Rate Dilemma
“In a tight labor market, you need to expect to pay higher salaries. Desired pay rates may come down with a recession. However, there’s no certainty if or when a recession will happen,” the recruiter responded.
“I’ve explained that to my management. All they see is the need to control costs and keep our clients happy. Besides, if we pay what the better candidates are requiring, then I’ll be bringing in new employees at higher rates than existing employees. Some of those current staff have the same or better qualifications. Meanwhile, I have unsatisfied clients who rely on us as their ‘inhouse accountants.’ Plus, I’m behind on my revenue budget because I don’t have the staff to bill out.” Her despair was palpable over the video connection.
The recruiter had been busily keyboarding as Maureen was presenting her concerns. When there was a pause, the recruiter shared her screen:
- Position requires 5-7 years of experience, 8 hours per day availability, regular in-office and client office meetings of significant duration.
- Qualified candidates want more flexibility or higher salary (or both).
- Higher salaries will result in payroll budget overrun.
- Higher salaries will result in salary disparities that could affect morale and require existing salary adjustments (see #3 above).
- Positions left open result in unhappy clients, unable to serve new clients.
- Positions left open result in missing revenue budget.
“You nailed it,” replied Maureen. “Perhaps I should rethink my requirements and be more flexible. My clients won’t be happy if we aren’t on call during all regular business hours and can’t stop by. I may lose some of them. What other choice do I have to meet cost and revenue budgets?”
A Better Approach to Staffing
“Not so fast,” the recruiter counseled. “Asking clients to settle for less is a ‘race to the bottom.’ Your client base will shrink to the size that your reduced workforce can handle, or worse. We need to accept the needs and wants of your client as a given. I do think we can recruit based on which of these options might be acceptable to you and your management.”
This was the next screen the Abel recruiter shared:
- Reorganize into teams. Each client would be assigned a team of two. The team members could flex as long as full coverage of the week and needed office visits could occur. Teams could even have part time staff, but only if this arrangement does not increase cost to clients. This would also allow knowledgeable coverage when one team member was on vacation or otherwise out.
- Determine what salaries could be paid to new staff, and adjusted for existing staff. This would be done in a way that would still allow full coverage of existing and new client needs. This will meet or exceed revenue goals and still yield an acceptable margin of profit.
- Add new staff as a contingent workforce through Abel Personnel. As economic conditions become clearer, some positions could be made direct and salaries adjusted per Option B. Otherwise, some contingent staff could be released.
Maureen was intrigued, but needed to run some numbers and discuss these options with her senior management.
The Abel recruiter emailed Maureen copies of the two slides that had been shared, adding a word of caution, “If the candidates you have seen are requiring higher salaries or more flexibility than you are delivering to your existing staff, then there is a risk that your competitors are going to contact your staff and offer these higher salaries and benefits. This is what I’ve been seeing in current accounting staff recruiting. Sometimes we need to realize that a high profit experience is coming to an end for a while. We cannot always see high profits regardless of changing economic conditions.”
“Funny, that sounds like advice my firm gives to our clients!” Maureen chuckled. “Sometimes you need a vendor partner to help you discover what you already know.”