As a manager, you have the financial responsibility to hire the very best person you can, given the salary budget you have.  But sometimes you can’t find the person you want to hire within your salary budget. What do you do then?  (First, be sure to read my previous post about hiring to fit the budget instead of hiring to fit the job).

Before you overpay for your next hire, or underpay and waste salary dollars on someone unqualified, you need to first understand whether you have a recruiting problem (you have not yet seen the right candidates) or a salary budget problem (you have seen plenty of candidates, but simply cannot afford to hire the right ones).  

If you think you have a salary budget problem, when you really have a recruiting problem, you will overpay for skills, probably hire someone too senior for your job and throw your salary budget out of whack. In casual conversation this recruiting problem is often presented as a salary problem (as in “we had to stretch our budget, because Frank was the only qualified person we interviewed.”)

If you think you have a recruiting problem, but really have a salary problem, you will interview endlessly and never end up hiring someone qualified. In casual conversation this salary problem is presented as a recruiting problem (as in “we just need to see a few more people”). A salary budget problem left uncorrected forces you to underpay relative to the market – which first leads to hiring low performers and then leads to turnover problems as your people leave you to make more money elsewhere.

So how do you know whether your salary budget is unrealistic or whether you just have a recruiting problem?

In my experience, conducting hundreds of executive searches across all functional areas, here are a few “rules of thumb” that will serve you well:

  • Have you spoken with, and learned the salary of, at least 6 qualified people who have experience similar to what you need? If not, you definitely have a recruiting problem – you simply don’t have enough information to know if your salary is unrealistic yet. (In counting your six people, do not count people who have progressed beyond your position but are “willing to step back.” And don’t count people who aspire to your position, but have not yet “stepped up” to prove their ability in a similar organization).
  • OK, if you have spoken to at least 6 people who are well qualified to do your job, were at least 5 of them interested in the position? If most of your candidate pool was not interested in your position, you still have a recruiting problem – you simply don’t have the right candidate pool.
  • OK, if you have at least 5 people who are qualified to handle your job, and interested in taking your job, you will probably find that at least 3 of them are earning roughly the same salary (give or take 5%). Typically in your group of qualified candidates, you can ignore the lowest salary, ignore the highest salary, and find your “sweet spot” right in the middle. That sweet spot is the “market rate” – ignore it at your peril. You are welcome to look at several salary surveys, but they give you nothing but job title to help you make a comparison to your job opening…which is hardly scientific. Hey, you can talk to anyone you want, or read anything you want – the hard cold reality is that when you find at least 3 living, breathing, qualified people with similar skills and abilities who are all earning roughly similar salaries…THAT is what you need to pay your new hires. End of story.

So when you know you have a salary problem, stop interviewing, gather up that salary information from all those qualified people you interviewed, muster up some courage, and go make a compelling case to your leadership team to raise the salary for the position. Be absolutely sure you have the salary budget you need, or else ask your managers to let you off the hook for all those goals you are accountable for. Not asking for what you need is not doing your job.

I’ll tell you what some people do when they have a salary problem. They keep looking. And looking.  And looking. Hoping to get lucky. Hoping to find someone willing to accept less than fair market rate for their skills. That is what I call the “ignoring reality” approach. And here is how it plays out: first your job is vacant a long time, followed by a brief period of mediocre performance by someone underpaid, soon followed a vacancy when the person discovers they can make more money elsewhere and quits. Because nothing is more expensive than hiring cheap employees.

Related Resources

We have updated salary guidance in light of trends toward salary transparency in 2023. Please see: