You will always find as an employer that if you find a good candidate for a job who you really want to employ, then chances are they are going to cost more than you want to pay or can afford to pay.
This is pretty much the same in every aspect of life really, but it is particularly so with recruitment, and especially in candidate-led markets as they are at the moment. Most vacancies are currently going unfilled without any applications whatsoever, yet we still see firms sending in vacancies with salary levels that are probably set at something similar to they would have been in the 1990s rather than in the 2020s.
Affordable Salary Levels
We do understand the difficulties law firms face, because not only are we recruiters but we are also business brokers, so we know the finances of a lot of firms, and the difficulties in paying anything more than the levels offered. But, this takes us back to the problem of looking at candidates who may be costing more than you can or are prepared to afford. How do we deal with this?
Performance Related Pay
The easiest way of taking on a candidate you cannot afford at a higher level than you were expecting to pay is to try to incorporate performance related pay. This is incredibly hard to do, but it is by far the safest way of upping salary offers, and perhaps one that a lot of employees get completely wrong when they make the offer.
Let’s for example take a conveyancing solicitor role. You advertise the conveyancing role for about six months, found nobody other than a couple of pretty useless applications, before your friendly recruitment agency source you what looks to be the perfect candidate, with the right experience, living in the right place, and available to start when you need them.
You interview them, they specify a current salary to you, and you duly make an offer to the candidate at slightly higher than their current firm are paying. You are probably surprised when the candidate turns it down, although your recruitment agent probably is not surprised at all, because the current market dictates that nobody moves unless there is a noticeable increase in the current salary, as this is pretty much very often the only way anyone gets a pay rise in the current climate.
So, let’s say for argument’s sake the offer you have made is £45,000, which to you seems a reasonable salary to be paying for a five-year PQE residential conveyancing solicitor. The recruitment agent comes back and says, “They would love to work with you, but they’re not prepared to work for less than at least £50,000 if not substantially higher.” You have looked at your accounts and decided that paying £50,000 is going to be above and beyond your capabilities, but you want to explore whether or not there is a way to still get that candidate to come and work for you.
Our advice as recruiters in this situation is to look at offering an achievable bonus. Take your current department earnings, think about what you reasonably expect from that particular role, and then form a view as to how you can put together an additional package that will tempt the candidate in. Just to clarify, this does not involve offering the candidate a percentage of billing above an unachievable level, because it won’t have any effect whatsoever.
If you are looking for a future partner to come in and buy the business, then perhaps now would be the time to start thinking about offering some kind of share deal going forward. You can of course set up different classes of shares so that the incoming member of staff does not have voting rights, for example, and you can take the shares back at any time, but offering some sort of share package for generating billing above a certain level would be one solution for attracting in a candidate who is ambitious and may want to attain partnership within a period of time.
The second thing would be to offer partnership at the outset, or at least the title of partner, whether this is salaried partner or fixed share partner rather than equity partner. This can similarly attract some candidates in, and you should have been exploring this during your interview with them.
The final way of doing it would be to look at your bonus scheme in quite a lot of detail. If your conveyancing department is currently generating £150,000 per annum in fees; this is paying a reasonable level of profit to you as the owner, plus the cost of the salaries, and you are quite comfortable with the current fees and expenditure. Say that you were to offer the incoming conveyancing solicitor 33% of everything they bring into the department, above the £150k mark that you are comfortable with, then in a good year you may be paying out an extra £15,000 to the candidate, if for example the department suddenly generates £200,000. The candidate would be extremely happy in these circumstances, and you would be happy because you would have benefited from additional income into your firm that you would not have otherwise had. Similarly, you have successfully recruited a candidate who you would not have otherwise had.
It can be hard to accept that any of the above is an option for you going forwards, but offering a bonus scheme or partnership options is an incredibly easy way of attracting in candidates and also benefiting your own department. You do not need the fixed cost of paying a particular candidate, but you do need to make sure that the bonus scheme is generous enough to attract someone in.
If you have any questions about structuring salary or job offers, please get in touch with us, as we would be delighted to assist.