You're hiring up an engineering team. You have five slots. Four are filled at market salaries. The four people range in productivity from marginal to good-at-stuff-no-one-else-likes, but none of them are that great. You almost have to keep the four folks, because they're entrenched in deliverables and plus, they've shown their dedication to the company.
In walks a candidate who's got the skills to single handedly deliver a major component of a product you have committed to make. You don't have but 50-60K left in the salary budget and the hires you've made so far don't exactly make you look like a genius.
The kid has no idea what he's worth, which is north of $130K, and asks for $55K. What do you do?
Ask the board for more money to give him what he's worth?
The first step should be giving some disclosure to the candidate. Say, "55k? You're so silly. We'd hire you for much more than that, we only pay fair salaries here. Let me talk to my people and see what we can make available."
If the other people aren't providing a value commensurate with their compensation, you should fire them whether you have an expensive replacement on tap or not. If they are providing such a value, it's probably better to keep them in place. Too often people overestimate new hires and underestimate the value of institutional knowledge. But if you have people that need to be fired anyway, that'd be a good opportunity to do it.
If your bosses think you're an idiot, you should leave. If you ask the board for more money and they have more money to give, they'll probably give it, unless they think you're an idiot, and then you should quit.
If there's no way you can get the additional allocation, just tell the candidate that you'll hire him at 55k for now if he's still interested and give him a bump when the money for a raise materializes.
If you're upfront with people, life is much easier, and you'll find yourself looking over your shoulder much less. :)
I think the "surplus effect" here would also be nice. If he was willing to accept $55k and you say, "tell you what, let's make that $75k because we really like you," you're going to get a very happy employee, because he perceives that you just gave him $20k he wasn't expecting. Whereas if he just threw out $75k and you said "fine," it doesn't feel like a gift.
You could get a similar, cheaper surplus effect with all your employees by throwing in perks. "Now that we've agreed on salary, we also want to give you an extra personal day each month," or a laptop, or a trip to a conference, or a weekly lunch, or something else that's nice but not incredibly expensive.
Hiring him for $55k is, in all likelihood, going to result in him quitting when he realizes that he's been unfairly exploited. It's just a matter of time until he discovers his true worth.
You're hiring up an engineering team. You have five slots. Four are filled at market salaries. The four people range in productivity from marginal to good-at-stuff-no-one-else-likes, but none of them are that great. You almost have to keep the four folks, because they're entrenched in deliverables and plus, they've shown their dedication to the company.
In walks a candidate who's got the skills to single handedly deliver a major component of a product you have committed to make. You don't have but 50-60K left in the salary budget and the hires you've made so far don't exactly make you look like a genius.
The kid has no idea what he's worth, which is north of $130K, and asks for $55K. What do you do?
Ask the board for more money to give him what he's worth?
Fire someone else to give him what he's worth?
Or, hire him for $55K?