What Every Employer Should Know About Salary Negotiations

July 18, 2017 Gloria Kopp

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After a long candidate search, you've finally found someone who seems to be the ideal match. And, if they're excited about the prospect of working for you, the situation is almost perfect. But, after a job offer is extended, salary negotiation still typically needs to take place.

  • A qualified candidate will likely come to the table prepared to negotiate and well informed on what their skills are worth.
  • They may also have multiple offers on the table from several different employers, that they are trying to decide between.

Employers should be equally prepared, using these strategies as a guideline to equip yourself before any negotiations take place. In fact:

  • HR Daily Advisor found that in most cases, nearly 72% are willing to negotiate salaries.
  • Only 13% refused to negotiate with a take-it-or-leave-it stance. 

As an employer, what should you keep in mind when faced with a salary negotiation? Take a deep breath and consider these tips:

1. Determine Your Limits

Before you begin making any offers, you need to know what the ultimate limits are to what you're able to offer the candidate you've chosen.

  • Although their qualifications and experience may be a perfect fit for the position, you can't give them more than you're able to offer.
  • Regardless of how amazing the candidate may be, don't make promises you can't deliver on — including salary, benefits and other perks.
  • When you put out your initial offer and the candidate counters, you've got three options – either agree to the higher offer, counter their offer or stick to your original offer.

In trying to determine what a reasonable salary should be expected by the candidate, check out PayScale and Glassdoor, both of which outline salary ranges for a variety of roles based on experience level and geographic location. Several things need to be taken into consideration, including the value this candidate will add to your business and if you have a backup candidate, should this one happen to turn down the offer. The last thing you'll want to do is start the search process from the beginning, so know where you stand before negotiating begins.  

2. Highlight Other Company Perks

Keep in mind that many job seekers are looking for more than a simple paycheck. The variety of perks your business offers can add that additional push a candidate may need in your direction. Health insurance, bonuses, vacation days, as well as other benefits can further enhance the salary offer you've put forward.

“Opportunity for advancement within the company can also be a huge selling point for a candidate. Remember not to make offers that you can't follow through on, but a demonstrated history of promotion within the company can show the right candidate that it's possible to climb the ladder from within. If a candidate is torn between your offer and another, the opportunity for a long and successful future within your company may be the perk that tips them over your way."
— Amber Coburn, Recruiting Manager, Essayroo

3. Be Cautious

As much as you may want to snag the most qualified candidate, you need to use caution when offering a salary that may be out of line with others within the company. Handing out a higher salary to a new hire may help you nail down their commitment to you, but you put the morale of existing employees at risk, should they find out that the newest member is making the same or more than they are.

You may want to do anything and everything to win over the ideal candidate but you can't undermine those employees who have been loyal and dedicated to you. Those who have trusted you to have their best interests in mind. Giving a new employee a higher salary than existing employees sends the message that you value your new hire more. Doing this is a recipe for angering your workforce, damaging morale and generating churn.

4. Don't Lose Sight of What's Best for Your Business

Throughout any negotiation process, it's important to know when to keep pressing forward and when to walk away. This can also go hand-in-hand with knowing the limits of what you can and should be offering. If you've put out your best offer, but the candidate is still hesitant or has flat out rejected it, you may be able to gently and tactfully probe them for some information and insight into why they said no to the offer. Pushing too hard for information is never encouraged, but a gentle conversation can give you information on how to tweak future offer. It may even give you the opportunity to alter your offer and win the candidate over. But, as always, you've got to keep in mind what your limits are and what is in the best interest of your business.

5 Write it Down in an Offer Letter

It's so important that, once you're prepared to make your offer, you put everything in writing. An offer letter lets you do several things. First and foremost, it outlines the terms of the job, salary, benefits and anything else involved in what you're offering. This ensures that there are no misunderstandings about what the candidate is expecting versus what you're offering. It also protects you and gives you something to fall back on, should that candidate come back to you to dispute what they have agreed to.

Things can be misheard or misunderstood in conversation, whether it's over the phone or in person. It's easy to get confused, especially in the heat and excitement of hiring and negotiating. Reviewing your written offer in person with your candidate is the best route to take. It allows you to point out important details and lets them ask questions and clarify things that may be confusing or unknown.

“After a thorough explanation, it's a good idea to leave the candidate alone with the offer letter, so they're able to take some time and review it on their own. This can allow for the opportunity to think of any additional questions or concerns they may have.”
Thomas Rood,  HR Manager, BigAssignments 

It's always best for both parties involved to go through a negotiation and hiring with complete transparency. Having a job offer letter gives you the opportunity to provide that transparency, and also protects you from future disputes about job expectations, salary or any other components of the job offer.

6. Be Prepared for the Candidate's Response

After you've put forward your offer, the ball is in the candidate's court. Of course, you've always got somewhat of an upper hand, since you're the one with the ability to hire that candidate for the position. But, it's generally in the candidate's hands as to the next steps that will take place. Anticipate the possible responses that may come your way and prepare your reactions. By being aware of the previous steps, including knowing your limits and being cautious with your offers, you can stay ahead of the curve.

Even if you're incredibly interested in a candidate, it's important not to seem desperate to please and hire them when you're involved in a negotiation. You can absolutely let them know you're interested, but the appearance of desperation can push the negotiating advantage towards the candidate. 

Know what you're willing and able to offer ahead of time, and stick to that. Anticipate what they will come back to you with and prepare your responses ahead of time. There is always a limit to what you'll be able to give them, so go into your negotiations with this in mind. If they are trying to push you beyond those limits, remember that you've got to keep yours and the company's best interests in mind.

7. Be Flexible and Fair to the Candidate and Yourself

Flexibility is always an important factor in any negotiation. If one party isn't willing to be flexible, a proper negotiation cannot take place. It's always a give-and-take situation. Both sides need to be prepared to compromise on certain things in order to get what they want in the end.

The ultimate goal for you is to hire the ideal, most highly qualified employee under the most reasonable terms possible. On the other hand, a highly qualified candidate will be looking to get as much as possible from their new job offer, not just in terms of salary, but with everything else involved in the job. Of course, both parties can never get exactly what they want, so there has to be some flexibility somewhere. While a potential employee may want three weeks of vacation each year, it may not be feasible for an employer to offer that as part of the package. A compromise may be reached that can satisfy both parties involved.

Throughout the entire negotiation process, it's important to bear in mind which points of your terms are negotiable and which are not. A candidate may want an explanation on why you're unable to budge on certain things, so you should have valid reasoning behind your decisions. Candidates that are highly qualified will be in high demand, so don't delay if you've found the ideal person. Get the negotiation process underway and present the best offer you're able to put forth.

Always remain clear-headed and calm throughout the process, never allowing your excitement or emotions to supersede the decisions you've previously made in a calm and thoughtful manner. Use the strategies outlined here to properly prepare yourself for a successful and productive negotiation process. Remember that it may not always go in your favor and you may not always win over the first candidate of your choosing. But, you can never compromise your business and what you're able to offer in order to score the candidate you have your eyes on.

About the Author

Gloria  Kopp

Gloria Kopp is a business and recruiting consultant from Sydney. She practices creative writing and is a regular contributor to Engadget, HuffingtonPost, Microsoft, Studydemic and others.

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