What you need to consider before engaging in negotiations
This section covers the basics of salary negotiation. It also highlights the options within the budget allocated for the role and provides insight on internal talent promotions.
The basics of salary negotiation
Salary negotiation can be uncomfortable for both parties involved. These discussions take place at specific times, which means not everyone has much experience in these discussions. The key when it comes to salary negotiation via email or as a discussion is to start from a place of respect.
Additionally, some businesses have salary bands assigned to different positions and levels of seniority in the business. Leaders offering jobs should be aware of these.
For businesses who do not have bands in place, it is recommended that managers work with human resources to create internal benchmarks. This leads to equity in pay between employees.
It is important to consider these internal restrictions during salary negotiation and to be aware of them ahead of the discussion or email exchange with the candidate. Knowing what the competition offers in terms of pay and benefits will also lead to more informed decisions.
When preparing for salary negotiations, managers should consider the following:
- The skills gaps within the existing team
- What the candidate brings to the table
- The skills needed for the role
- The budget allocated to the position
- The level of flexibility on all the points raised above
Options that fall within the allocated budget
Budgets for new hires can be tight and put the hiring manager in a tough spot. When this is the case, there are some options to consider. To help bring more value to the job offer, leaders can offer employer-sponsored benefits. These benefits come in handy for candidates as they often reduce living costs or bring more comfort to their lives. For example, health insurance and retirement savings are highly sought after financial benefits. Additional PTO (paid time off) is a non-financial benefit that is highly valued by candidates. It provides them with flexibility and comfort in their lives.
Managers should be fully aware of what the budget is for the position prior to launching the recruitment process. They should know their buffer when it comes to negotiations and when to walk away. Having awareness of the additional monetary and non-monetary benefits available is also recommended.
Talent development and internal promotions
Before looking for candidates outside the organisation, hiring managers and recruitment teams should look at promoting internally. This approach leads to talent retention by giving opportunities to high performers. It also presents many benefits for the hiring manager. The process is smoother and the employee in their new position is likely to be more effective as they will already have existing relationships in the business and will be aware of the company culture and its ways of operating. This option should be preferred to external recruitment, unless internal candidates do not fill the gap in the existing teams.
Other things to know about salary negotiations
The more employers know about salary negotiations, the more likely they are to succeed at recruiting or promoting the right candidates. The section below provides recommendations for managers engaged in salary negotiation.
Who decides what salary to offer candidates?
Knowing who decides the salary is a must. Often, hiring managers are not the final decision makers. They follow guidance and rules that are set by the organisation. These rules are usually in the form of salary bands.
Negotiations are not always a smart move
Negotiations should only happen after the business has made an initial offer. When making that initial offer, employers should consider internal and external benchmarks as well as other factors such as the location of the role and the level of responsibility. If you get the first offer right, it is likely the candidate will accept it right away.
Managing the back and forth of salary negotiations
When the first offer doesn’t satisfy the candidate, it is appropriate to make a counteroffer. This approach should be thought through. Back and forth should be avoided as this might put strain on the relationship.
10 tips to boost your salary negotiation
Mastering salary negotiations can lead to recruiting the ideal candidate for the open position. However, when not managed well, this step can have a daunting impact on the budget and may also lead to unfair situations within your organisation. Knowing where you stand and when to stop negotiations is essential. Below are some useful tips that will lead to fair and competitive pay.
Set salary ranges based on positions and levels of seniority within the organisation
Bands that set out the lowest and highest salary within that band should be created before posting the position. This approach focusses the negotiations. The ranges should be created based on industry standards for similar positions.
Benchmark salaries internally and against competition
Knowing how the competition is positioned in terms of salaries is essential. It will allow hiring managers to know if their offer hits the mark and if it is convincing enough. In addition to external benchmarking, it is valuable to benchmark salaries internally. This brings consistency between salaries within the organisation. It addresses crucial elements such as the ethnicity pay gap or simply fair pay.
Be transparent while not giving away too many details
Being transparent during negotiations builds trust. As such, it creates an environment where both stakeholders involved are comfortable. Being transparent on what can and cannot be done will boost the relationship. However, giving away too many details has some pitfalls too. A fine balance should be found between being transparent and keeping the upper hand.
Keep your focus on people/talent
When it comes to salary negotiation, you might think that the number achieved is what matters. However, recruiting a new employee is about people. The personality of the person you are recruiting, together with their skill set, their drive and overall attitude matters much more than the final number you reach during negotiations. Hiring managers and recruitment teams should focus on getting the right profile and offering the appropriate package, including benefits.
Remember the possibilities of non-monetary benefits
When keeping within a salary bracket, it is not always possible to increase the salary offered to candidates. This is when additional benefits come in. Signing bonus, company shares and additional PTO are all examples of benefits that can be very convincing. Be open about what can be done and gauge the interest of the candidate.
Communicate the salary range upfront
Some job adverts include the salary range in their content. Communicating the salary range upfront brings many benefits to the recruitment process. It ensures that overqualified candidates do not apply for the role and that candidates opt in or out early in the process. This approach is transparent and avoids wasting time.
Don’t lead with the best offer
Starting with the best offer can lead to disappointment. On the other hand, leaving space for negotiating upward will demonstrate that the business is willing to make an effort for the applicant. As such, it has a positive emotional effect on the recruitment process.
Always close your negotiations on a positive note
Regardless of the results, always close your negotiations on a positive note. If the candidate has accepted the final offer, the hiring manager will be working with them for the mid to long term. No animosity should be left from the negotiation process. Even if the candidate has declined the job offer, they might apply for other roles in the organisation or even work as a client in the future. The relationship should not be left in a bad place. You never know what might happen in the future.
Don’t give up on the ideal candidate based on your budget
If you have spotted the ideal candidate, the one that will fill the skills gap within your team and will boost morale, don’t get stuck because of budgets. Engaging in internal conversations and demonstrating why the investment is worthwhile can take you a long way and lead to long-term benefits for the business.
Be a partner throughout the process
The potential new hire will be part of the hiring manager’s team. As such, it is essential that the recruitment process and the negotiation that goes with it doesn’t damage the relationship. Use the process as an opportunity to build a partnership. Be on the applicant’s side, give them time to process the offer and be honest.
When it comes to salary negotiations, everything is about balance. Businesses should be aware of how much they are willing to invest in new talent while keeping fair and consistent compensation within their workforce and staying on budget.
We have a lot more on pay and negotiation in the UK. Take a look at the articles below for more:
