I’ve seen many companies lowball candidates when it comes to giving them an offer.  Although they believe they’re saving money by paying below the “market rate,” it’s actually costing them a lot.

Let’s take a look at five specific reasons why you should never give a lowball offer.

1.) They’ll Take Another Job

If the candidate that you’re considering is good, they shouldn’t have a problem finding other jobs.   Strong talent is hard to come by, and those that possess it have it typically have other options. You never want to risk offending a great candidate and having them reject it, and possibly resent you for trying to take advantage of their time and talent.

Most companies rationalize a lowball offer by telling themselves that. “They can always counter.”  In reality, candidates tell me all the time, “I don’t feel like they appreciate what I can bring to the table.” This is just a bad way to start a new relationship.

2.) They’ll Quit

I know what you’re thinking, “Oh I’ve got a steal with this candidate.”  Instead, consider this; If you found this great candidate, so can other companies.  If another company reaches out offering $20,000 more, don’t you think your employee is going to respond?

It’s for this reason that you should always pay your employees what they deserve and treat them well.  The longevity of your relationship will ultimately improve when your employee feels valued emotionally and financially.  They’ll stay for a much longer time, and bring their highest levels of work to the table.

3.) Even If They Accept, You Lose

For the sake of a balanced argument, let’s say that the candidate accepts your low offer.  You might just walk away feeling like you both got a win.  However, the new candidate will probably start this new job feeling defeated.

Do you really want your new team member to feel like they lost out on something they felt was deserved?  Do you think a person with these feelings is going to feel excited about working hard for you and your business?  Ultimately, this results in a loss for both parties, which is not what you’re looking for when bringing on new employees.

4.) You’ll End Up Spending More Anyway

When you make a hire based on a low offer, you might think that you saved yourself some money.  However, what happens when this new employee leaves in a year?  What happens is that you you’re going to have to interview, hire, and train a new employee.  In the end, this means more spending, which is what you tried to avoid by lowballing your candidate initially.

5.) You’ll Develop A Reputation

Do you want the reputation of being a cheap company that doesn’t pay well?     You want people thinking that you’re the most generous company conducting business in your sector.  You want so many great applicants that your hardest decision will be which one to hire. Reputation has a big impact on the hiring process, and you should conduct yourself accordingly.

With these five points in mind, my recommendation is probably already clear.  If a candidate is really good, I would advise companies to give them an offer where you can go to bed at night thinking, “There’s hardly anybody that’s going to pay or treat this employee as well as I do in the industry.”

Paying well is really important, and should be approached with an understanding of how critical it is, however it’s not just enough to pay well. I want to also note that you have to tell your employees how much you appreciate them, and treat them like gold.  This starts with pay, and goes well beyond financial transactions.