Trying to sell a relocating candidate on a lower compensation than what they make today, based on a lower cost of living, is a common closing technique in our industry. However, this is a pretty common miss in recruiting, but in my experience it is also a pretty easy fix. When attempting to get candidates to commit to relocation we most often go through a version of the “Ben Franklin close” — list pros and cons and hope that there are more pros.
I’ve recruited all over the world, and oftentimes when we are looking to differentiate one place from another, the concept of “cost of living” bubbles up high on the list either as a pro or a con. Emerging or developing markets, as well as rural markets often point to this as a great reason to move there and plant your stake in their community. It sounds good. Who wouldn’t want a lower cost of living? However, most often it’s used by organizations in those markets to try and hire talent that would command a higher market price elsewhere in a fashion that drives their compensation down to the new location’s cost of living index. This, my friends, is a classic logical fallacy.
The problem isn’t with the concept of cost of living per se; the issue is that we generally throw it out as a sound bite. It is a great example of telling versus selling, something that happens all too often, not just in recruiting, but in any sales type field. We assume that it matters. We also assume that all things are equal, and anyone who has worked in this field knows that is never the case.
Before we can begin to talk about cost of living as a differentiator, we need to understand where our candidate is in regards to standard of living. There are two things to consider. First, many folks, regardless of their current compensation, live paycheck to paycheck. They may be carrying one or more types of debt (student loans, credit card, underwater mortgage, etc.). In these instances, although a lower cost of living may seem advantageous in the long run, the organizations servicing their debt do not reduce that debt to correspond with a lower compensation based on a lower cost of living. Second, standard of living may speak to how your candidates currently choose to spend their income. They may be patrons of the theater, they may enjoy recreations activities that are unique to where they currently live, or maybe they are foodies who enjoy a variety of culinary styles, for example.
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In both cases, as you take the time to learn the why’s behind your candidate’s interest in making a change, you must also take the time to learn, and to provide honest counsel, on what impact a cost of living change would truly have on them. It may cause an unreasonable burden on their ability to manage their debt; conversely it may allow them to buy a home, when they have only been able to afford to rent up until now.
It also means we have to honestly sell not only our opportunities, but the communities we represent. Usually, what I’ve heard (both as a recruiter and as a candidate) is a laundry list of all the good points about said community. In 20 years, no one has ever taken the time to ask me what I’m interested in or what is important to me. I’ve lived in communities where there is an extremely low cost of living, but if I wanted to see live theater, I had to drive three hours away. Same if I wanted any kind of Italian or Asian food. This all comes at an expense in the past I did not have to bear, and it adds up fast. Either way it calls for very honest exploration and discussion. Otherwise you may quickly lose a rock star new hire six months after they join, when they realize they are actually worse off in their new location.