When you can’t compete on salary, how do you attract great talent?

Determining the ‘right’ salary for employees requires developing a multi-pronged employee value proposition that go beyond just remuneration, writes Leonie Green.

In short:

• This article outlines four key points to help law firm set the ‘right’ salary.
• Firms are advised to focus on culture, employee development and a sense of belonging.
• Employee value propositions are most effective when they are unique to a firm.

If you are striving to attract top talent without the leverage of competitive salaries, you might find inspiration from an unexpected source – the animated classic Kung Fu Panda. The unlikely hero of the movie, Po, embodies the essence of a firm that competes above its weight class through a distinct sense of identity and unique market offerings.

Salary is by no means the main or sole currency to attract or retain talent. To be clear, though – salary is relevant, if not foundational, so let us deal with it first, and then we can come back to being Po.

I have often considered how salary connects to Maslow’s hierarchy of needs, with salary representing the foundational need for security. We need to get the salary ‘right’ for the employee. That is, we need to meet the security need. Otherwise, anything we provide on top of it by way of other benefits will fail to tap into the discretionary effort we need from our employees to ensure our firm reaches its own self-actualisation.

When salary is not ‘right’ (I will explain what I mean by that in a moment), it will always be ‘wrong’, which means we will have employees who are not fully engaged, at best, and, at worst, who are actively disengaged.

Salaries need to be ‘right’ for the employees and the firm’s owners. Otherwise, we will have firm owners who are frustrated with what they are paying and not feeling they are getting the full benefit or output from the employee or employees in exchange. We should always be seeking the unique-for-our-firm win-win balance when it comes to salary.

Set your own price

In many ways, a salary is no different to an agreement on purchasing any other good or service; it must be a win-win, otherwise someone is losing out (either the employee, or the firm). It can be a win-lose on an individual basis, or a collective basis, depending on how consistently we pay our employees. Or it can be a win-win on a collective basis when we hit the right level and consider it holistically, rather than competitively.

So, how do we get salary ‘right’ when we cannot compete on salary? We start by setting our own price, rather than looking around at what others are doing. We need to consider several factors forensically and carefully:

• Purchase price: What can we afford to pay? If we pay less, what do we risk? If we pay more, what do we risk? What is the level at which we will be comfortable on a sustainable basis? What does that buy us, and is that enough?
• Expectation setting: What do we expect by way of output/fee generation for what we are prepared to pay, and is that fair to the individual and our firm: that is, do we have a win-win or sufficient equilibrium, or are we at risk of a win-lose situation for us or the employee?
• Transparency and trust: How transparent can we be about how we pay, across the board, and can we improve on this to generate greater trust from our employees and future employees about how we operate and why? Given fee transparency changes recently, is there more to be gained by being open, or at least more open than we have been, about our salary approach or philosophy?
• Unique offering: Finally, this is where Po comes in: what else is part of our employee value proposition besides salary? What is our unique offering: who are we as a firm, what sort of employees do we want to attract, and what will they want to see us doing and being, beyond what we can offer by way of salary?

This last point assumes that we get the salary question ‘right’ for us as a firm first, and we hold to it. As soon as we diverge from it, we risk a win-lose for one or more of us within the firm. Once we have it right (for us), we can then consider tapping into the inner Po of our firm to make sure we are offering something well beyond salary.

Just as Maslow’s theory suggests that individuals must satisfy their basic physiological and safety needs before ascending to higher levels of self-actualisation, employees will almost always prioritise financial stability when evaluating job opportunities. Who among us does not? We all have our own sense of what financial security looks like; it is quite personal.

However, once the salary is ‘right’, we have only met a base-level need. We need to consider how we provide for the higher-level needs, such as belonging, accomplishment, through to self-actualisation, which any lawyer worth their salary is keen to achieve.

Beyond meeting basic needs, talent will seek opportunities for personal growth, meaningful connections and a sense of purpose in their roles. Now, more than ever before. This is where we get the real benefit from the employees we are engaging – when we start hitting their higher-level needs.

These higher-level needs can be met through a variety of means, including:

• Culture: clarity of values, and alignment of culture to values
• Development: structured and supported learning and development within our firms; and career pathway options
• Belonging: fostering social connections and engaging work environments.

Think sustainably on salaries

The key is that our employee value propositions work well, and work best, when they are unique. We should identify our firm’s inner-Po essence and then sell that offer to the market for a price to which we stick unashamedly because we know it is the right price for our firm.

We need to be brave when it comes to salary, and not focused on the next hire, or the current panic of the tight labour market. We need to think sustainably, and we need to hold true to what our firm’s strategic priorities are and will be for the years ahead.

We are investing in employees who we hope will stay with us and grow with us. So, the work we do now on our employee value proposition, or market offer, is about who we aspire to be and finding the employees who are attracted to and align with those aspirations.

Be brave. Be Po. Create, rather than compete.

Leonie Green is the co-founder and director of the Corvus Group, a workplace and legal advisory firm with more than 20 years of senior legal and HR experience working in Australian and international companies. She practised as an employment and industrial relations lawyer for a number of years prior to moving into management roles in industrial relations, shared services and human resources. She can be contacted via email at leonie@corvusga.com.au.