So you’ve found the perfect candidate for your job, Congratulations! After offering the job the negotiation process will begin. Your candidate may not accept your job offer immediately, requiring further negotiations in order to reach a mutually satisfying employment contract. This is usually the most delicate recruiting stage of the whole end-to-end recruitment process. It must be handled with special care and attention.
Giving employees a fair salary while also staying within budgetary restrictions helps you balance company finances and staff retention. Negotiate salaries in a respectful, ethical, and productive way by:
Knowing industry standards
Gather data on the pay range for jobs in your industry at different experience levels. More experienced candidates may expect a higher salary than people who are just starting out in their careers. Research your key competitors who offer similar services, since they’re likely to be hiring for similar positions. When performing market research, browse job postings that list salary and see how your business compares, especially within your geographic area. Don’t forget to research other forms of compensation such as benefits, travel stipends and bonuses.
Setting a range
Assess your company’s budget and make sure you understand how much you can afford to spend on a new hire. Set an upper and a lower limit that’s reasonable for the position and think about what factors could influence your offer depending on the candidate. Unique skills, experience, attitude, industry connections and plans for growth could all make a candidate more valuable to your business.
While the upper salary limit functions to make sure you can afford labor expenses, the lower limit helps ensure the employee gets reasonable compensation and won’t leave the role in search of a fair salary for their workload. The salary range you set should make sense in the context of how much other employees are paid.
Determining their expectations
Ask candidates what kind of salary they are looking for to understand their expectations. Some employers ask this question on the job application to help hone in on a reasonable salary offer. Don’t be intimidated if the answer they give is higher than you’re prepared to pay. Candidates who are prepared to negotiate may start high with the expectation of compromising on a lower salary. People who can directly ask for a fair salary show initiative, self-awareness and confidence in the value they can bring to your business.
Understanding your benefits
An employee’s pay rate is only part of their compensation package, and you can use company benefits as a tool in a salary negotiation. Employees may be more flexible on their salary expectations if your company offers perks like unlimited time off, performance bonuses, tuition reimbursement, professional development opportunities or excellent health insurance.
Before initiating a salary negotiation, be prepared to discuss what additional benefits you could give an employee to make the terms of their employment more attractive. Some benefits like a company health plan may not be up for negotiation, but you could consider offering additional paid vacation time or flexible workdays.
Starting the negotiations
Being by offering a specific number. This allows candidates to adjust their expectations and also gives them an idea of a reasonable salary range. Influencing someone else’s expectations by giving the first offer is called “anchoring.” Mentioning the first salary figure shows the candidate how you value the position, which can have an impact on how they perceive a job offer.
Considering a signing bonus
Offering candidates a one-time cash payment of a few hundred or thousand dollars as a signing bonus can motivate them to accept a job offer. The immediate gratification can generate excitement for the position without requiring you to commit to a long-term salary increase.
Expecting a counter
Prepare for the candidate to make a counteroffer where they ask for a higher salary or better benefits. This is part of the negotiation process so don’t interpret a counter-offer as disrespect or lack of interest. Employees want to make sure they feel valued and see a future at your company. Start by offering an amount that is lower than you’re willing to pay so that you can make adjustments based on a possible counteroffer.
Once you reach your limits in a negotiation, be clear with the candidate that you cannot offer any more compensation. Being transparent when discussing your company’s resources demonstrates respect and prevents you and the candidate from wasting time trying to negotiate further. If you can’t come to an agreement with a candidate that falls within your budget, respectfully set a firm limit that they can either accept or reject.
Giving it time
Allow candidates to spend time considering the offer and weighing the pros and cons before giving you a final answer. As an employer, you want to hire candidates who are confident in their decision to join your company at an agreed-upon rate.