Negotiating the Right Salary with Your New Hire
You encounter lots of eager and excited people as you interview for open positions. Anyone who takes the time to come in and meet is going to be interested in the opportunity. But candidates not only want to get the job. They also want you to pay them the salary they have in mind.
Negotiating a salary that is acceptable to your company and new hire can be tricky. In this guide, you’ll learn how you can determine what to offer and the approach you should take to negotiating salaries with different types of candidates.
Money isn’t everything
Happy employees do their best work. Employees who are concerned about money lose motivation and explore other job opportunities.
Negotiating a salary with a new hire isn’t the same as negotiating for a used car. Your goal shouldn’t be to get the candidate to settle on the lowest possible number. Strive to come to an agreement that works for your company and pleases the candidate so they’re inspired to do great work everyday.
Saving a little money on payroll likely won’t affect your company much. But convincing a great person to join the team can have a lasting impact.
How the modern job seeker thinks about salary
Everyone goes into a job interview with a salary range in mind. The bottom end is the bare minimum they’ll accept and the top end is often an optimistic number they hope to get but aren’t counting on. When asked about desired salary, candidates will usually respond with a number that falls somewhere in the middle of their range.
A candidate’s salary range can be influenced by a number of factors. Most people will use their current (or previous salary) as the bottom number. They’re hoping to move onto a job that will pay slightly more or may be willing to accept the same compensation with a different company.
They’ll then research what similar positions pay in their industry and area. Between professional social networks and the various websites that provide salary data, today’s job seeker is more informed than ever before.
The rare birds who don’t prioritize salary
From time to time, you’ll encounter a candidate who values other qualities in a job over salary. They might be looking for work-life balance, an appealing culture or simply a fresh start with a new company or career. These candidates will still have a desired salary in mind but it won’t be the deciding factor in whether or not they accept your offer.
How companies should determine what to offer
Like your candidates, you should also have a salary range in mind when the hiring process begins. The obvious starting point is to offer what you pay employees who work in a similar role. You never want to pay someone significantly more or less than their counterparts. The reality is people get to know each other in the workplace and pay rates are eventually shared.
If you’re hiring for a new position, determining a salary range isn’t so simple. You should first get familiar with the market and learn what the going rate is for the skills and experience you are seeking. You can do similar research as your candidates, as well as ask for insight from knowledgeable people in your company and network.
Then you should consider your budget. Can your company afford to pay what a reasonable candidate will ask for? If not, you should probably reevaluate the position’s requirements.
Ask about salary sooner than later
If you do have the budget to pay someone what they’ll likely ask for, you can proceed with interviews. Since both you and your candidates have salary in mind, it’s often best to address the elephant in the room right away. You can ask about desired salary during your first communications with a candidate or even include the question on your online application using your recruiting and hiring software. If someone has an unrealistic number in mind, you can move onto other candidates early in the hiring process.
If you do your research, you’ll often find your salary range aligns with your candidates. Negotiations will be quick and painless since both parties will be working toward a similar figure.
Coming to a mutually-beneficial agreement
The interviews are finished and everyone agrees on the best candidate. You reach out and make an offer within the salary range you set at the beginning of the hiring process. Some people will accept the offer, while others will negotiate. If you receive a counteroffer that is still in your range, it’s often best to say yes and end the negotiations right there. You don’t want to lose someone bartering over a small amount of money.
But what if the candidate wants more than you budgeted for? In these cases, honesty is the best policy. If you interviewed other good applicants, you can tell the candidate they’re your first but not only choice and they’re asking for more than your budget allows. If you have wiggle room, you can offer a bit more but don’t go outside your range when you have other options.
Pleasing an ideal candidate
If the candidate is clearly your best option, you should make an effort to come to an agreement with them. Again, be honest and tell them their desired salary is outside your budget but don’t immediately say no. Meet with your team and attempt to come up with an offer the candidate will accept. Perhaps you can free up some funds that can be used to be meet the candidate’s number. If not, get creative and sweeten the deal with stock options, a flexible schedule, or other perks that won’t break the bank. Making an effort to meet your candidate’s desired salary can often be enough to convince them they’re being presented with a great opportunity – even if your final offer is a below what they asked for.
A solid plan makes for easy salary negotiations
Some people negotiate and others don’t. If you make a fair offer, most the time it will be accepted. Research standard pay for the position you’re hiring for and budget accordingly and your offer will likely be exactly what the new hire had in mind.
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