Welcome to Recruiter Q&A, where we pose employment-related questions to the experts and share their answers! Have a question you’d like to ask? Leave it in the comments, and you might just see it in the next installment of Recruiter Q&A!
Today’s Question: Do you negotiate with prospective new hires about pay? If not, why not? And if you do, what is your approach to salary negotiations ?
The answers below are provided by members of FounderSociety, an invitation-only organization comprised of ambitious startup founders and business owners.
1. Explain That There’s No Room for Negotiation
While everyone thinks they deserve more than they are paid, it’s tough to negotiate when so many qualified people are out of a job. With jobs easily being outsourced to different countries and freelance marketplaces thriving, it’s tough to justify paying new hires more than what you currently have set in your budget.
This year, we implemented a no-negotiation policy at our company. Since we are a younger company and can’t always compete on salary, we want our potential employees to identify with our culture and our mission. As a result, we provide unique benefits and continue to invest in our team as much as we can. We want to hire people who will be a good fit and are not just here for money.
Being a startup, we aren’t financially in a position yet where new hires can negotiate salary. However, we’re trying to build a creative environment where young creatives want to work. We sell them on additional perks or benefits, potential room for advancement, and the ability to shape their position as the company grows.
At the very early stages, the only negotiation is equity versus cash. The employee has to take some of each, and in general, the equity is discounted the more they take (limits apply). Most people have a number they need to maintain a lifestyle they are comfortable with. You have limits on what you should offer. Negotiation takes us from the initial offer to the one that makes sure the employee is incentivized.
If you want great talent, it’s never cheap. Find out what the role is worth and what you can pay. Remember that negotiation is not just about base salary. Look at the bigger picture. Also keep in mind that just because you are a startup, that doesn’t mean the rules don’t apply to you. If your company has a great culture and lots of product potential, you can use that to negotiate.
6. Tell the Potential Employee What You Can Afford
In an early-stage startup, you have a very clear and limited amount that you can pay new hires. Equity discussions are where more negotiation can happen.
