One of the key stages of the hiring process is the starting salary negotiation. It is a hurdle that needs to be overcome if you are to close the deal on your dream candidate. While there is no magic formula for handling a salary negotiation—as it can be impacted by many external factors beyond your control—there are several tactics to follow that can help you to engage in a mutually beneficial and ultimately successful salary negotiation more of the time. And below I have set out some tips on how to negotiate harder and smarter.
1. Put the salary range in the job description
There is a general reluctance for employers to include salary details in the job description, but by failing to do this, you are making salary negotiations harder as you are not setting the candidate expectations correctly and you may attract candidates who are off the scale. Where possible, include a range, even if it is broad, and make it clear that the candidate’s actual pay will be dependent on their experience and likely contribution to the business. This way you will filter out those candidates who are out of the ball park and where salary negotiations are likely to be fruitless — and a potential waste of both party’s time.
2. Check you are in the same ball park
There can be a tendency for the candidate and hiring manager to negotiate according to poker rules and not show their hand early, which means salary expectations may not be revealed until late in the process. This can lead to salary negotiation issues if the candidate and employer salary expectations prove to be wide apart or not in the same ball park. At the very least, ask the candidate to confirm their current salary and package, so you can check you are in the same ball park and save wasting each other’s time.
3. Give additional reasons to join you, other than just money
Don’t allow the candidate to become too fixated on salary; give them other reasons to join you by constantly promoting all the other positive perks and aspects of working at the business, be that: culture, training, challenging work, location, benefits, flexible working, etc. The candidate will factor in all these perks and may be prepared to accept a lower salary in the knowledge that they will be receiving all these great perks.
4. Make the offer face-to-face
Where possible, try hand to them the offer letter face-to-face and then talk them through it, rather than by post or email. Its much easier to reject or query an offer that has come via email, or letter as it is quite impersonal. So, personalize and make the offer face-to-face and this should give you the upper hand. Of course, the candidate should still be given a few days to make up his/her mind, if need be.
5. Present the offer as a total reward package
When making the offer, present it as an itemized total reward package so people can see the true value of what is being offered to them. So, include: salary, size of any bonus, size of any retirement fund with monetary value of contribution, plus value of any health insurance premium value, number of vacation days, company car value, personal training budget, etc. Also, itemize any non monetary perks like flexible working and casual dress code.
6. Leave some negotiation room in your offer
Research shows that most managers tend to leave some negotiation room in their offer. This is not necessarily the same as ‘shooting low’, because if you make too low an offer, a candidate can be insulted and you might force him/her into driving a harder bargain than intended. Always make a fair offer based on their current salary, their need for advancement and market expectations; but leave enough room to negotiate. Don’t forget, many people like to negotiate and see it as part of a relationship building process.
If employees refuse your offer and requests a higher salary, ask them what is their expectation and ask them to provide economic evidence for their position. Also, ask them to detail their past achievements and likely contributions to justify their requested starting salary. This is a strong defensive play, which firmly pushes the ball back into their court. Who knows, they may persuade you they are worth it, or they may be forced into a reality check, which could make them more accommodating.
8. Bargaining tools
You should also have an array of bargaining tools—based on your accumulated knowledge of the candidate—at your disposal that you can offer in exchange for salary. For example, perhaps the option of working from home, or a compressed week may be more attractive to your candidate in preference for salary. Perhaps you could make pay raises conditional based on achieving agreed performance goals. You could enhance their bonus. There are many other options available to you in the event that the candidate rejects your initial offer.
There is no magic formula for handling a salary-negotiation, but I hope you can see there are steps you can take to perform more effective salary negotiations more of the time. A well thought out negotiating and closing process is critical to your success!