An Employer’s Guide: The Secret to Successful Salary Negotiations

So, you’ve found your next star employee. But the compensation package you offered her is not what she expected. Do you give up and let her walk away? Or do you increase your offer?

Often, it depends largely on the internal processes and procedures that your company has in place.

Some companies have salary grades assigned to each position, and so your new employee would receive a salary offer that’s a percentage of the grade that she’s qualified for.

However, it’s important to consider your internal constrictions. For example, if two employees within the same department are doing the same job, one shouldn’t make $40,000 per year while the other is making $70,000 per year.

There has to be a balance between what you can afford to offer candidates and what candidates are bringing to the table. If they bring a unique set of skills that are significantly different than other people in the department, then offering them more money probably isn’t going to raise any concerns.

Whenever you’re hiring someone from outside the company, you want to evaluate all the factors and take a high-level overview of:

  • What the candidate is bringing to the table
  • What the needs of the department are
  • What the budget allows for

The important thing is to not lose your perfect candidate over salary negotiations. A lot of times what causes an employer to lose a candidate is a gap in salary that’s only between $2,000 and $5,000 dollars—which is about a dollar an hour.

Do you really want to lose your ideal candidate over a dollar an hour?


Put your best foot forward from the get-go

Whatever you’re going to offer—you want to make sure you’re putting your best foot forward.

You don’t want to offer a candidate—regardless of circumstances—$5,000 less than the candidate is currently making just to see if you can get a good deal. That’s really not a good way to start a new relationship.

It needs to be your best offer.

For example, let’s say your candidate is currently making $50,000 per year. You offer her $60,000 even though your original budget was $65,000. That’s no way to convince her to take the job – especially if you’re willing to go higher if she doesn’t take your first offer.


What to do if you’re on a budget

If you’re strapped for cash and can’t afford to pay your new hires a hefty salary, there are other options that could help bridge the financial gap.

One way is to offer employer-sponsored benefits, such as health insurance and retirement savings accounts, where you cover a percent of the premiums and fees. Also, instead of requiring the standard 90 day benefits waiting period, perhaps you can lower it to 30 days.

Does your company offer a cell phone plan or corporate discount? Do you offer a laptop or any sort of electronic equipment that can also potentially be used for personal use, too?

Any possible flexibility in the person’s work schedule, such as working from home two days a week, which can help off-set the cost of commuting and can be very appealing to some candidates.

There are a lot of non-monetary elements that you could include in a candidate’s total job offer, to take the focus away from dollars and cents.

However, you should really only look at the non-monetary elements if you can’t afford candidates’ minimum salary requirements.

You also need to know your walk-away point—not the minimum you can pay, but the maximum.


If you’re promoting an employee from within the company

All companies should have an “application for transfer” policy in place so that employees know what’s required of them should they want to apply for another position within the organization.

Before you put a policy in place, you’ll want to:

  • Evaluate how your company determines salary ranges at the moment.
  • Create an application for transfer and make it accessible to all employees.
  • Determine a process for deciding how you’ll qualify current employees for transfer to another position. For example, do employees need to be with the company for six months before they’re eligible for transfer? Or do they need to be in their current position for a year before they’re eligible for new positions?
  • Think about the other qualifications standards that need to be considered, such as whether your employees are in good standings with the company. Have they been doing a good job in their current role? How did they do on their performance reviews last year? Are they meeting the minimum standards for their current role? And, most importantly, do they have the minimum qualifications to interview for new positions?

Some final tips

When it comes down to it, there shouldn’t be any surprises in the end. Have your conversations about salary with the potential candidate up front, keeping things as transparent as possible.

If you don’t know the market value for the position you’re hiring for, you can check out resources like CareerBuilder.com or Salary.com. Both of these sites have tools to help you get a better idea of your candidates’ salary expectations before you make them an offer.

But if you’ve done a thorough job of understanding what’s important to your applicants and what their drivers are, you’ll do a better job of putting together a well-liked compensation package the first time.

This way you shouldn’t even have to negotiate.

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