Stop Talking About Cost of Living and Start Talking About Standard of Living

Screen Shot 2014-12-03 at 2.17.36 PMTrying 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.

Jim D'Amico is a globally recognized TA Leader, specializing in building best in class TA functions for global organizations. He is an in demand speaker, author, and mentor, with an intense passion for all things talent acquisition. Jim currently leads Global Talent Acquisition for Celanese, a Fortune 500 Chemical Innovation company based in Dallas, TX, and is a proud Board Member of the Association of Talent Acquisition Professionals.

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7 Comments on “Stop Talking About Cost of Living and Start Talking About Standard of Living

  1. “Can’t even get decent food. Right after I got here, I ordered some spaghetti with marinara sauce and I got egg noodles and ketchup. I’m an average nobody. I get to live the rest of my life like a schnook.”

  2. I find these articles and conversations odd, because these ‘honest explorations’ always seem to be geared at convincing the candidate why they should accept less than they are getting now. As a sometimes candidate now – with the economy turning around I’ve gotten calls – I’m sick of hearing about “Opportunity!,” lower costs of living, or different/higher standards of living. Here’s a revolutionary idea: pay candidates enough that it’s not a damn issue, because they don’t have to work their bills out to the cent to make sure they can scrape by while still being able to eat.

    If you want them to work for you, SHOW IT IN YOUR ACTIONS. Don’t have your recruiters tell the candidate, “We’d really like to hire you, now here’s our rationalization of why we shouldn’t pay you what you asked for, which we knew going in, and which we’re now going to low ball, and when you say no, we’ll claim there’s a talent shortage instead of just admitting that we’re cheap.”

  3. I can confirm the challenges that Jim
    refers to in attracting talent to a rural community. Candidates typically know deep
    down whether or not they have the ability to adapt to it. You can’t really hide
    it when you can see the corn fields as soon as you step off the airplane. It
    starts a classic debate about the benefits for living and working in smaller
    community or a larger one.

    Jim, Do you think this is why a lot of hiring
    managers that are committed to that community are hesitant to recruit/hire outside
    of their immediate region of the world? I like the shout out to the Ben
    Franklin Method; I still have success with it.

    1. Hesser, I think hiring managers do have those concerns, and if they have had a bad experience in the past, it will often jade their future decisions.

  4. Hi everyone,

    in my current role as Senior Recruiter for Oracle I am facing many times this situation. A very good website that I suggest to have a further look on is http://www.numbeo.com/cost-of-living/
    This comparison tool helps candidates tremendously to get a better feeling for local market conditions and to understand why salary in country XYZ is lower than in their current home country.

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