The most common question I currently receive is how much less can I pay in the current market? As the economy looks to bounce back, many businesses are looking to bring in new employees to push ahead with their projects and look to achieve a strategic advantage over its cash strapped competitors. Hiring managers and businesses beware, offering lower contract rates or salaries can come back to bite you when the market starts to turn!
With the declining economy and most businesses cutting contractors at the beginning of the COVID19 pandemic, there is an influx of contracting talent available on the market. In all there is a lot of talent out there, with the unemployment rate around 7.5% +, it is a buyers’ market. This has led to a common supply and demand effect on contract rates and permanent salaries. We have seen an influx of Project Managers hitting the market as many of their projects were cancelled or put on hold, this is generally due to their projects being of additional requirement to a business usually and are typically the first to go.
With the government pushing through schemes to help the economy and consumer confidence improving as cases of COVID19 cases continue to fall nationally; business will look to launch new projects. The first instinct is of course reassessing the current job market and discover how much new project teams will cost and how little you can pay for good talent. This first instinct is premature and possibly a dangerous one. “You would not walk into a Ferrari showroom and expect to pay less!”. We have seen businesses paying anywhere between 10%-20% less then prior to COVID19 when coming to market to hire new talent; some companies go through the entire recruitment process, want to hire they preferred candidate and then start to negotiate them down on rate/salaries as they feel they have the power with current market conditions. The candidate will most likely accept as offers are few and far between but the danger here is that the best talent or the Ferrari knows its worth.
As the job market rebounds, this will leave your business high and dry without your Ferrari leading the pack. Technology projects already run over budget often, the cost of re-establishing your project team is costly due the hiring process of course but what it could do to your project and strategic objective can be devastating. So why not pay the Ferrari what its worth? Short term pain for long term gain and as we all come out of this economic downturn, it will be all about the long-term gain.
Of course, there is an exception to any rule, with Christmas fast approaching the best talent may be available for shorter projects over the festive period before longer term higher paying opportunities are available in the new year. Of course, you need the cash flow and a short piece of work needed to be completed for this strategy to be effective.
I certainly agree the economy is not what it was prior to COVID19; but you would not walk into a Ferrari showroom and expect to pay less because it is a Ferrari and its worth the money. So before hiring your new Ferrari/Candidate, remember to pay them like one!