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Compensation discussions: an employer’s guide


Discussing salary and compensation with job candidates can be tricky. To keep from wasting your time or the candidate’s, you need to make sure you’re both in the same ballpark.

At the same time, while you do want to put a best foot forward and be honest, a salary compensation discussion is not the time to reveal everything.

Staff members involved in the screening and hiring process need to know what to say about compensation, and how to say it. Otherwise, you risk turning off potential candidates.

Further, it is unlawful to ask about a candidate’s salary history in some jurisdictions, so it’s important to educate those hiring about best practices specific to their location.

Another risk is that by revealing too much, too soon in the process, you may limit your options when it comes time to make an offer.

An important exception to this guideline is for jobs that have a set salary for everyone, such as all salespeople start at $50,000 a year, or all cashiers start at $15 an hour.

But when there’s a salary range, some common questions for hiring managers are:

  • At what point do you discuss compensation with a job candidate?
  • How much do you reveal, and when?
  • If they seem to have reservations, do you try to negotiate?
  • Do you give them a breakdown of the value of employee benefits?
  • What are some mistakes recruiters and hiring managers make when discussing compensation with candidates?

When and how to discuss salary

A compensation discussion should be a two-part process. In the initial screening interview, the recruiter should ask, “What salary range are you expecting for this position?” If your candidate states a number that’s within your budget, your reply should be, “That’s within our range.” Then move on to discussing aspects of the job and the interview process.

Save more detailed discussions and negotiations about salary until you’re ready to make an offer.

If you screen several candidates, and each gives you a higher or lower range than your budgeted salary, it’s time to conduct a compensation review. The job market is much more fluid than in years past, and you may have to adjust your expectations to find the right candidate.

If you’re hiring more than one person and have a salary range in mind, be careful. Paying applicants differently for the same position or for comparable work will run afoul of discrimination laws in certain jurisdictions unless the salary is based on legitimate, non-discriminatory reasons, like geographic location or experience.

It’s important to keep your initial compensation discussions about salary honest, but general, keeping any specifics for when you make an offer. You may need to move your salary range up or down, depending on the market. If you find during the screening process that salaries have fallen for a given position, and you’ve revealed a higher-than-average salary range, you won’t be able to negotiate down later.

When to discuss benefits

As health care costs continue to rise, your benefits package may factor heavily into a potential candidate’s formula for whether your company will be a good fit. That’s why you should volunteer information about benefits during the initial screening interview.

However, depending on the candidate’s needs, you may be asked to discuss benefits in some detail early in the process. To prepare for such questions, get a summary of your benefits package and think through some of the best aspects of those benefits so you can highlight those in any discussion.

If your company doesn’t offer any health care benefits or a 401(k), that should be clearly stated in the initial screening call.

Preparation is the key to success

Probably the biggest mistake any recruiter or hiring manager makes is being unprepared for the interview.

If you don’t have an idea of the current salary range for a job, refer to online resources, such as Glassdoor or Indeed. This can give you a feel for whether your idea of a good salary fits your region.

Then, write down your interview questions, and be sure to include a mix of behavioral and skills-oriented questions. Before you can make an offer and discuss salary, you need to make sure this person is a good cultural fit for your company and its future team.

Another common problem: searching for a candidate for months without success. If you can’t find the right person after an extensive search, accept that you may be looking for a purple squirrel. Purple squirrels don’t exist (in nature). Be open to changing the job description or salary to fit your available candidate pool.

Once you’ve made an offer, be prepared to discuss any out-of-pocket expenses in detail. While your salary may not wow them, your benefits may offer more coverage or cost less, which will make your company more attractive.

Remember, this is a prospective employee’s first impression of your company. The more upfront and honest you can be now – even in the midst of a compensation discussion, the better you’ll set the tone for their entire experience, whether you hire them or not. Create a good impression, and even if you don’t hire them, they may refer a friend who is perfect.

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