How should you handle it when one of your agency’s employees — or prospective new hires — comes to you and asks you to match another offer?
Or perhaps they approach you and tell you that they need to get a significant pay raise so that they aren’t “forced” to go into the marketplace to try to find opportunities that pay more.
In this episode, Chip and Gini discuss how to approach these requests, whether you are in a super tight talent market like we see today or even in more “normal” times.
Chip Griffin: “If you’re going to give a significant bump in pay to somebody, you also need to change their title and responsibilities at least to some degree, because that signals to the individual that you’re not just paying them a substantial amount more for the same job. You now have higher expectations for them. But it’s also something you can use with other team members.”
Gini Dietrich: “One of the things that we do in the very first interview is we say, this is the salary range. Does that work for you?”
Chip Griffin: “I think that you can be penny wise, pound foolish on some of these hiring decisions. If a prospective employee says I need an extra 2K or something like that, for God’s sake say yes.”
Gini Dietrich: “If they’ve already interviewed, already taken time to find a new job, then I may be able to appease them for six months by giving them a bump in salary to match it. But it’s not gonna last, they’re gonna go do it again in six months or a year.”
The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.
Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin
Gini Dietrich: and I’m Gini Dietrich.
Chip Griffin: And since Gini has gotten her hair and makeup all settled in the pre-show, we can now jump in today’s episode and Gini, I think we’re gonna have to have a bidding war for your services.
Gini Dietrich: Awesome. Love that.
Chip Griffin: Right after this.
Leading into today’s episode. I had to wait for Gini to fix her hair so she could actually, I don’t know, see the camera or something. I tried to do the same to mine and then realized I didn’t have any, so it wasn’t gonna happen.
Gini Dietrich: Yeah. There’s no Bobby pinning your bangs back or anything like that?
Chip Griffin: No, no. I could probably do it to my eyebrows.
They can get long at times.
Gini Dietrich: I dare you. Next time.
Chip Griffin: No but thanks for playing. No, what we are gonna talk about today though, is indeed the topic of bidding wars for employees, because we all know that the agency talent market is really, really tight today. And so you’ve got a situation where sometimes you’ve got a candidate that you’re trying to hire, who will say, you know, I I’d love to come work for you, but I’ve got this competing offer from another agency.
Sometimes you get an internal employee who says, you know, I need to be bumped up to this amount or I’m gonna have to go find another job. Or perhaps they come to you and say, Hey, I’ve got an offer from another agency. Can you match it so that I can stay? I’d rather stay with you. And so, you know, these are all questions that agency owners have to confront today.
And because of the tight talent market, there is often more of a willingness to engage in these bidding wars for talent than perhaps ever before. And so my question to you, Gini, is if someone comes to you, how do you handle these kinds of situations? Both generally and also in the current market.
Gini Dietrich: I mean, the answer of course is it depends, you know, if, if we’re looking for the person to exit on their own terms, then no, we’re not going to.
But I’ve also been in a situation where, you know, a really great employee has come and said, I got this job offer this. I’m gonna make $20,000 more. Can you match it? And I’m just not in a position to be able to do it as much as I would like to. So I think you have to take into consideration quite a few things.
Right. Do you have the ability to do it, A. Is it somebody that you want to keep at all, no matter what? B. And C, is there a way that you could transition it if you’re maybe not in the opportunity to give them a $20,000 or $25,000 raise right off the bat, are there ways that you can work it in, in different ways so that it can, you can get them where they need to be within 12 months?
So I think there’s a lot of things to consider and I think it just depends on what the situation is.
Chip Griffin: Well, why don’t we walk through a couple of the specific kinds of scenarios, because it is sometimes different, whether it’s an existing employee versus a new hire, it’s also different if they come to you before they start looking versus after, at least in my view, it is.
So let’s, let’s start with the employee who comes to you and says, Look, inflation is beating the crap outta me, you know, by if I still get paid the same or roughly the same as what I’ve been paid in the past, I’m really falling behind. So in order to keep me from, from looking for a job, because perhaps my significant other is, is pushing me to do it, or, you know, perhaps because I’ve just looked at my books and I need to do it.
I would like to get more from you to get me into that, that range where I, I believe I need to be. How do you handle that when someone comes to you with that issue? So they haven’t started looking, at least, at least they haven’t told you they’ve started looking somewhere else yet.
Gini Dietrich: You’re probably not gonna like this answer, but if somebody comes to me and makes their personal financial problems my problem, they’re not gonna get it.
If they come to me and they say in the last year, I’ve been able to accomplish this, this, and this and this. And you know, when so and so left, I took on their clients and now we’re doing this, this and this, and these are the kinds of results. And oh, by the way, I’ve been looking at what a comparable job would be if I went to another agency and it, I could get $20,000 more, can we have that conversation? I’m much more willing to have that conversation than the I can’t pay my bills. Inflation is killing me. Gas prices are like, that’s not my problem. But if you show me the work that you’ve done for the agency and how you’ve made, you’ve made great strides and you’ve gotten results, then we can have that conversation.
But. It, I, I may be among the few, but don’t make it my – don’t make your personal and your personal bills my problem. If you can change that conversation, then we will have it.
Chip Griffin: I, I think it’s, at least for me, in some respect, it comes down to how they present it. If they present it in a whiny, you have to solve my problem kind of way.
Okay. I don’t like that. But if they’re, if they’re just sharing information and candidly saying, Hey, this is, this is reality. I mean, frankly, that is my problem, right? If I want to keep them, and the only way I can keep them is at a higher number. It, it is my problem. And I need to decide if it’s something that I want to address or not.
So the, the fact that they’re sharing with me, that they have, you know, financial pressure or personal pressure to earn more. I’m I’m actually okay with that. I think that sharing that is, is fine. I, I still have to have that conversation with myself or my leadership team, if I’ve got it about whether or not this makes sense.
And I think to me in that case, the biggest thing that you need to think about is what is the actual value that that employee is bringing and, and does a higher salary actually make sense? Can you price effectively? Are you already priced effectively in order to absorb that cost or not? And I think one of the mistakes we make is we dwell too much on the individual and, you know, are they worth it? Do we need them, all that kind of stuff and not looking enough at the, the cold, hard financial facts for us as an agency and say, okay, what does that mean? How does that impact our profit margin? If we give them an extra five, 10, 20,000, and so you’d really need to do that math first.
Gini Dietrich: I also think that you have to look at it. I have the fairness gene where I say, okay, if somebody’s gonna come and they’re, let’s say they’re a senior account executive and they’ve presented a very good case on why they should get a $20,000 raise. If somebody else that’s their peer that has the same kinds of results.
And works the same in the same manner is, is now I have to look at that and say, can I also give them a $20,000 raise?
Chip Griffin: Correct.
Gini Dietrich: So I really look at it across the board. Can, can we afford not to just not to keep, not to give this person or just this person a raise to keep them, but can, can we do it across the board to make sure that everybody’s at the same playing level?
So I look at it from that perspective, too. And as a small agency owner, I mean, inflation costs and all this stuff are killing me too, as an agency owner. So I may not be able to do that. And I may not be able to do it just because we don’t have the, the cash or the income to do it. Not because I don’t wanna keep the employee.
So there are a lot, I think there are lots of things that you have to take into consideration while you’re looking at these sorts of things.
Chip Griffin: Absolutely. And, and you make a great point about comparing them to other individuals because inevitably employees find out what their coworkers are making.
Gini Dietrich: Yes. Always.
Chip Griffin: So, so you need to make sure that if you agree to give someone a significant salary bump that you have a ready answer when someone else comes to you and it’s either, yes, you can also have that or it’s no, but here’s why I treated this individual differently. And so, you know, part of that is that you know, I always tell agency owners, if you’re going to give a significant bump in pay to somebody, you also need to change their title and responsibilities at least to some degree, because that, first of all, that signals to the individual that you’re not just paying them a substantial amount more for the same job.
You now have higher expectations for them. Right. But it’s also something you can use with other team members when they say, Hey, I want a 20 K bump too, or a 10 K bump too. And you say, well, that’s fine, but, but we can’t do that until you’re ready to move to this level and take on this responsibility. So that you’ve got, you know, a, a consistent salary structure across your organization, because a lot of small agencies get into trouble by having all sorts of one off compensation agreements.
Yeah. And, and as you grow, that becomes a bigger and bigger problem.
Gini Dietrich: And I think also having a really solid career path for each position. Absolutely. So understanding if, if this, if you are going to give this person a significant pay increase and give them a title increase, what that, those additional responsibilities look like, and it’s outlined, it’s not just something that you guys handshake on, but that it’s outlined.
And as part of that career path plan you have, um, what’s the word I want? Ranges for salary. So we go from this to this, and then we go from this to this, so that it’s really clear for everybody. And then that helps you say, okay, well you’re not ready for it. And you know, we’ve, we’ve had, we’ve had these conversations.
These are the things you, you need to continue to work on. And once you get there, then we can bump you up. So it’s easier to have those conversations when it’s, it’s, there’s an actual plan with salary ranges of what the career path looks.
Chip Griffin: Right. And I think the other thing is be careful about handing out titles like they’re candy, right?
You know, it’s, it’s, it’s better to make an account executive, a senior account executive as the next bump, as opposed to like making them a vice president or something like that. A lot of small agencies historically have tons of vice presidents and, and that’s fine.
Gini Dietrich: Oh, big agencies too.
Chip Griffin: They do, but right.
But, but as you, as you grow, it becomes harder and harder because you know, you, you sort of run out of titles and I’ve seen some small agencies with just a handful of people and they want to have like a COO or something like. Well, that’s great. But now what happens when you know, you’re double in size and they’re no longer the best fit for that kind of role, it’s really hard to layer someone if their title is too senior.
Yeah. So, so be gradual, I mean, give the title bumps, but, but do them in a more gradual way so that you have more room to maneuver as you, your agency grows and as you need to, to scale that team out.
Gini Dietrich: Yeah. And I also think you need to be, take into consideration. you could also be hurting the, the employee in their future job world. Because if you give them a vice president position, you know, with three years of experience, they’re not gonna get that anywhere else. You might be doing it just to, you know, appease or suffice or make them feel good about what the work that they’re doing. Because it’s important to them, but they’re not gonna be able to, to, to leave and commandeer that kind of title.
And it creates in them may not be your problem anymore, but it creates all sorts of animosity. So I think you have to think about that too.
Chip Griffin: Yeah, it creates challenges too, because a future employer may think that they’re overqualified for a role because they’re a vice president working for you. And, and I’m really just looking for a senior AE.
Right. And it may be that they were just doing senior AE work. But when they’re just looking through the, you know, the resume they see vice president. Oh, this is, this person’s overqualified. So they may not even, they may lose out on opportunities in the future and, and you don’t really wanna do that.
You want to help your talent continue on in their careers. Because as we’ve talked about here repeatedly, there are opportunities for you to engage with those alumni of your agency to help grow your business down the road. So, absolutely. So let’s look at, we’ve looked at the, the case where an employee comes to you before they start looking.
Now let’s take the case where they’ve got an offer in hand from another employer and they come to you and say, Gini, I’ve got an offer from Acme agency and they’re willing to pay me 20 K more. I’d really love. I, I love working for you. I love the team here. I, I wanna stay, but I mean, it just doesn’t make sense for me to stay unless I can make the same amount.
Can you match that? How do you – how, if at all, is that different for you from the, the case where they come to you before they start looking?
Gini Dietrich: So my feeling on that is they’ve already interviewed, they’ve already taken time to, to find a new job. They’ve probably embellished time off that they’ve taken to be able to do that.
And I feel like if that’s the case, then I, I may appease them for six months, you know, by giving them a, a bump, a bump in salary to match it. But it’s not gonna last, they’re gonna go do it again in six months or a year. So my feeling on that is kind of the same as with clients who say we’re putting the, the account up for review because we have to get two more agencies involved.
From a pricing perspective, procurement’s making us do it. No, I’m not competing. So if you want a new job have at it, cuz I’m not. I just, I mean, again, it depends, but 99% of the time I’m gonna tell them good luck and be, have them be on their way.
Chip Griffin: Yeah. That’s and that’s where I am as well. If, if they, if they have an offer in hand, you know, people don’t leave just because of money.
And so if they’ve gone through the interviewing process and they’ve gotten, you know, they’re either looking for a new challenge or they don’t like a client, or they don’t like a, a coworker or they don’t like you, or there’s something else other than the finances of it. And so they may be, I mean, frankly, sometimes they’re just looking for something they can then take back to the, the new employer and say, Hey, you know, they offered me to match. Can you, can you sweeten it? Right. So sometimes they’re just using you for leverage. Yeah. And so you, even, if you agree, you may still get burned. So if you do agree, make sure that you underst that, that it’s, you know, you have to accept pretty much now, right? We’re not, this is not –
Gini Dietrich: Right. We’re not going back and forth.
Chip Griffin: We’re not getting into an actual back and forth, bidding war, an actual bidding war with the new employer. Yeah. But, but generally speaking, my advice to you is at that point that they have made the decision to go. As you say, it’s, if you manage to keep them, it’s going to be a short term thing.
They’re still gonna leave in in six or nine months anyway. So my preference is let ’em go. Wish them well, you know, don’t burn any bridges. If you really, if you just can’t, you’re the market’s so tight, you know, we can’t get by. I can’t hire that position that quickly just feel like you’re in a bind. Go ahead and match. Start recruiting immediately for the replacement.
Gini Dietrich: Absolutely. Yes. 100%.
Chip Griffin: I guarantee you. I mean, I, I, I cannot think of a situation where I’ve had to go through that process where I match another offer and they’re not gone within six to nine months. It always happens. Yeah.
Gini Dietrich: 100%. I totally agree with you.
Okay. So what about the candidate who you’ve made a job offer to and they come back and say, I need $50,000 more because Agency X just offered that to me.
Chip Griffin: Right. So I, I, to me, in those cases, anytime you’re going out into the market to try to hire talent, you need to be really clear with yourself what’s your budget, right?
Yep. So just, just like, you know, if you’re, if you’re gonna go buy a house or a car, something like that, you know what your budget is, what you can afford. And just because you happen to see a house that’s 50% more than what your budget is. You don’t just say, oh, sure. I’ll go ahead and get that right. I mean…
Gini Dietrich: As much as you might want to.
Chip Griffin: As much as you might want to. But the reality is particularly for houses and, and to a lesser degree, but it’s still pretty much for cars. There’s, you know, there’s an amount that you actually can afford, right? And so you need to know what that number is for the role that you’re hiring for. Now, if they come to you and say, Hey, I need substantially more because I’ve got this other offer, or maybe they don’t even have an offer.
Maybe they just say, this is what I need to, to get for this role, your offer just simply isn’t enough to entice me. You need to understand the finances again and whether or not you can hire them perhaps for a different role. Right? So I wouldn’t, I wouldn’t give someone a 20 or 50 K bump to a new hire without saying, well, I can’t hire you for this role, but what if we had this role instead?
And so, but it has to be something where you can get that added value. So maybe in the course of interviewing them, you’ve discovered that they have some skills, some ability, something that you can market or utilize, or you can reduce your spend on, you know, maybe you’ve got someone who’s got good with creative stuff, but that’s not their primary role.
Well, now maybe you don’t have to outsource to a graphic designer some of the small projects, maybe you can do those in-house. If you can come up with some sort of a model like that, that works financially for you, I’m much more open to it. But don’t just get into a bidding war for the sake of getting someone in the door because you then are just in a position where you’ve brought them in at a higher number. They’ve come to expect that they can hold you over a barrel.
Gini Dietrich: Correct. Yep. That’s right.
Chip Griffin: Anytime you give someone one of these kinds of, of big bumps, whether it’s coming in the door or later on, they’re gonna expect to be able to do it again.
You’ve set a precedent.
Gini Dietrich: Yeah. I agree with you. And one of the things that we do in the, the very first interview is we say, this is the salary range. Does that work for you? Correct. If they come back, actually not for, my agency, but for a client, we were interviewing for a job. And we said, this is the salary range.
Does that work for you? And she said, yes, it’s great. And then we got all the way through and we offered her the job and she said, I need $30,000 more. And I was like, no, no, we, no. We had this conversation three weeks ago. When you started interviewing there’s no, there’s, there’s no $30,000 more to give you. She did not get the job.
Chip Griffin: Right. And, and a lot of people, you know, it’s sort of like a lot of people will submit resumes for jobs that they don’t meet the direct qualifications, listed the, the requirements for that role because they figure they can just talk you out of it. And so a lot of people seem to think of salary ranges the same way.
And in part that’s because too many employers, not just in the agency space will violate their stated ranges, particularly in a tight talent market, just to get somebody on board. So people are you know, they’re, they’re tempted to do it, but don’t, if you’ve got a range, share it and stick to it. And, and that’s what you have to do because otherwise you’re gonna create a financially imbalanced agency, which is bad for everybody.
Gini Dietrich: I have a visitor. If you’re on video, you can see, I have a visitor who’s not super keen on talking about salary ranges. She wants to talk about animal videos instead.
Chip Griffin: Do, do you think, do you think maybe she could hold off on the animal videos for just a little bit, so we can finish.
Gini Dietrich: I’m asking her to, to please wait until I’m finished, 5 minutes.
Chip Griffin: While you’re talking to her, I will talk for a little bit, cause I have no problem talking. And so, you know, the, the key when you’re looking at these kinds of salary discussions, and, and if you’re doing something like sharing a range, you have to remember that the employee or perspective employee is always hearing the high end of that range.
So if you say our range is 50 to 70, the employee hears 70. It’s like when you tell a client, this is gonna cost 30 to 40. They hear 30, they don’t hear 40, right? So everybody hears when you’re giving a range, everyone hears the number high or low that helps them the most. And so you really need to focus most on those numbers and make sure that you’re not overstating what you can actually pay for a role.
Really keep that as close to the ceiling as possible. And if, if someone comes to you and they’re asking for a significant bump over what you’re offering them, I’m generally inclined to say no, unless you, you know, talk them through about something that really gives you that added value that gives you a financial picture that really works.
Gini Dietrich: Yeah. I really like the idea of saying, oh, well actually I can’t do it for this job, but we have this job open as well. And you’d be great for that. I love that. Right. You know, in a small agency you may have that, and you may not, but maybe there’s an opportunity for you to hire them as a contractor part-time to do some of that additional work. So I think there are things you can work out for sure. I love that idea.
Chip Griffin: Yeah. And it’s just, it’s, it’s thinking creatively, but making sure that you get the return on investment, because if you, if you simply overpay for it, it’s a problem. Now that said, I also think that you can be penny wise, pound foolish on some of these hiring decisions as well.
So if, if an, if a prospective employee says I need an extra two K or something like that, for God’s sake say yes.
Gini Dietrich: Right. Just give it to them.
Chip Griffin: Right. I mean, don’t, you know, because at some point you, you come across as, as cheap or something like that. Right. And so if it, if it’s really just something, a small amount and because look at it, if you give someone an extra two or even 5k.
Once you spread that out over the, the 12 months of their salary it’s a pretty small amount. Yeah. And so I would rather try to keep them happy coming in the door, as opposed to having a new hire who’s like, ah, you know, I bit the bullet and I took this and it’s, you know, it’s not quite where I needed to be.
It’s it’s maybe the same as my last job, or maybe even less than my last job. I, so, so you want them coming in excited about the opportunity. And so if it’s small dollars or a small request, you know, I want an extra couple of vacation days. For God’s sakes. Give those little days.
Gini Dietrich: Right, right, right, right.
Yeah. The extra vacation days, stuff like that doesn’t really cost you any money. So 100% do that.
Chip Griffin: Right. And, and the other thing to think about is, you know, when you’re looking at any of these kinds of conversations in any of these three different scenarios, there is a difference between giving someone a salary increase or perhaps giving them one time bonuses instead. You can do a sign on bonus, for example, with a new hire. You could do, or you know, maybe they, they only get it after the first three months or something like that. Right. So you get past that, that window and they’re not just taking the cash and running. You can look at it with retention bonuses for employees or spot bonuses.
You know what, look, I can’t give you a 20 K bump, but I can give you a 5k bump and I can give you a, a 5k bonus because of this project that was just completed or something like that. There’s often a variety of different ways. And you need to look at it from the finances of your agency, which makes sense.
Are you better? Are you cash flush now, but you don’t want to have a higher cost basis down the road? Then do a bonus. If you are cash poor right now from just a cash flow perspective, you know, go ahead and spread it out by giving them a bump in salary because the, the short term dollars are much lower and you get to the same place.
So be creative about how you’re doing the comp, as long as it makes financial sense, no matter which model you’re looking at.
Gini Dietrich: I agree with all of that and there’s chaos going on in my background.
Chip Griffin: So, the chaos in your background is similar to the chaos in the agency talent market. And the only way that people can deal with it is to get away from the chaos and focus on what really matters. So –
Gini Dietrich: That was the best segue ever.
Chip Griffin: So we are gonna get out of this chaos. We are gonna extract ourselves from this episode before we go really downhill. I’m Chip Griffin.
Gini Dietrich: I’m Gini Dietrich
Chip Griffin: and it depends.