Walking into a leading university library yesterday there were two stacks of books ready by the doors all ready for the incoming ‘freshers’. They weren’t text books or details on where to find the best parties. The books were titled, ‘The top 100 employers’ and ‘The top 300 employers’ or something very similar.
The purpose of the guides is to establish the names and brands of the companies into the minds of ambitious students at the start of their course. This has one purpose – to help ensure that the best talent applies to you and not to your competitor.
It couldn’t be further from the harsh reality facing job seekers a few miles away at the Job Centre, or the millions scanning online job adverts (some of which may actually be genuine) in the hope of finding fulfilling employment at something other than the minimum wage. [Good luck with securing pay above the minimum wage if you are looking in the Job Centre by the way, but you are looking in the wrong place for that.]
If there was ever a lesson to the new students that hard work matters, then it was facing them as they walked into the building that will consume many hours of their life over the coming years as they struggle to meet deadlines, avoid charges of plagiarism and push the boundaries of how long caffeine can keep you awake in the hope of securing the grades that will unlock interviews to those advertised careers.
It all makes sense. Pay well, offer good working conditions and know that you have the best talent that there is.
But as I walked back to my car I wondered why other companies set their sights intentionally low. Flicking through the books and looking at starting salaries there is clearly a relationship between pay, prestige and success. It is logical that the best companies pay the best salaries, but why do second tier companies pay less (up to 30-50% less) thereby removing any realistic potential of attracting the best people. Surely it would make sense to pay more – or at least equal the best and recruit the very people that you would be competing against. You would pay more, but is the person not able to generate additional revenue or profit to cover that differential? It could start a price war, but surely that is already there – with the second tier companies having conceded before they start.
When Google find that the difference in performance between an average employee and a exceptional employee can be as much as 300x, then why is the pay so close?
Is the issue that the second tier players have resigned themselves to that position? They pay an acceptable level, and get acceptable people?
Or that the the ‘politics of envy’ limits starting salaries as they are higher than existing employees and this would create problems?
Or that it is simply unaffordable? This could mean that the company is unable to realise the cost differential from the additional pay.
Regardless of what the reasons are, the lessons for students are clear, go for the best paying company. This is no guarantee of a happy union, but you know that your employer wants you more than the competition, and that is not a bad reason for joining. That is not the only factor in picking an employer, but joining a company that pays less than you could get would be settling for second best?
I’m searching for some companies that have intentionally disrupted the market, by hiring A list calibre from the start – you can list most technology successes here, but have any established second tier companies done this by switching to a ‘hire A list strategy’ and been successful?
Updated: 24Sept14 to correct minor typos.