We all know the situation: It’s been a tough search with limited quality candidates and you’ve got a severely under-staffed internal team. At last, you find a great candidate who fits the bill and loves the company, and every thing is going fine until at offer stage they drop the clanger that they want a starting salary that was much higher than budgeted! What do you do? As a hiring manager or recruiter, you have to do your best to negotiate with this candidate making sure that if any raise is granted it does not upset the internal pay hierarchy or else you could be facing discord and a spate of pay rise requests leading to unhealthy levels of internal inflation.
We know that this can be an awkward situation that most recruiters and hiring managers will face from time to time and below we have set out eight ways to help you handle this difficult situation.
1. Buy yourself time
Don’t feel pressured into giving an immediate answer to a candidate’s request for a higher-than-budget starting salary, irrespective of whether your answer is positive or negative. Tell the candidate that you will need time to discuss this with your colleagues and superiors; let he or she see that there are barriers, e.g. other people that need to be convinced. Plant a seed of doubt in their mind.
2. Ask the employee if they have any evidence to back up their claims
Ask a candidate, “Do have any evidence to back up your claims for a higher starting salary as your reward department will need to see this in order to even consider a case.” Defer some of the decision making to other parties not present, and put some hurdles in place, so the candidate can see that while you are open, it will not be an easy ride and he or she will need to justify their case. This approach may help to deter the ‘chancers’, but the more determined will keep on pushing.
3. Give them a total reward / compensation statement
Ask your finance team to prepare a Total Reward Statement which includes both a base salary and a monetary valuation of any benefits they will receive so they can see the full monetary value of their package. The package may indeed be worth more than they realize, which could convince them to accept a lower starting base salary.
4. Clarify any non-financial benefits they receive
Prepare a non-financial benefits summary which details all the non-financial perks such as commitment to flexible working and work life balance, stimulating work, health checks, etc. They may have overlooked some of the non-financial benefits, for example, will flexible working result in lower childcare costs, or will they simply be happier working for you than your competitors.
5. Consider introducing cafeteria benefits
Consider allowing the employee to sacrifice some of their benefits, e.g. (holiday, health insurance etc.) in favor of an increased base salary, although this would have wider ramifications in the business in relation to the HR and well-being strategy. This could be a viable option, which could lead to them having a higher starting salary, without extra financial cost to you.
6. Consider introducing a performance related bonus/element
If the employee is in a position to directly effect revenue, e.g. the individual is in sales or production, consider giving him or her a bonus or performance based part of the employee’s salary which is contingent on reaching financial targets. This could be win win as the employee gets higher pay and the company gets higher performance/revenue.
7. Offer them a pay rise after their probationary period
Offer the employee a pay rise after their probationary period (during which they must meet certain targets), which sets the tone that they must work for a higher salary and won’t be handed anything, just because they ask.
8. Benchmark their salary request against the market and your internal pay structures.
Assess the external market and assess your own internal pay structures. Is their request above market norms and/or does it bust your internal pay structures? Be careful here, if you do choose to pay a salary that is higher than market/internal norms you risk creating pay disparity in your business which could damage your morale. Of course, you could pay a higher salary and then raise salaries of comparable internal staff to maintain parity.
Whether or not you choose to grant a candidate a higher starting salary upon his or her request is up to you and dependent on a range of factors such as budget, market rate and its effect on internal pay parity. If you do choose to raise a starting salary, ensure that you consider the potential knock-on effects on your internal pay parity, and also make the candidate jump through some hoops to get the money, e.g. tie it to performance targets, probationary reviews, because if it is too easy it won’t be long before they are asking you again for a pay rise.
Also, before turning it down outright, try some of the options I mentioned above, such as clarification of the full value of their benefits and the offering of a win-win performance related bonus. Of course, if you can’t afford it, you can’t afford it. Fully explain your rationale to the candidate, giving him or her hope of progression and earning more in the future. At least the employee will respect your position and maybe the prospect of a longer term, more lucrative future may enable to the worker to swallow the lower salary in the present.