So, you've found the perfect candidate for the job and extended an offer. Now it's time to negotiate. Job seekers today have access to a plethora of information and resources about how to negotiate salary. Many top candidates enter their job search already knowledgeable on the topic and with money on their minds.
When negotiating salary, it's essential to understand best practices so you can hire the right people for your organization. These salary negotiation tips for employers will help you to make fair offers for both your company and your potential hires.
Don't lowball from the start
If you're not starting the negotiation process with a competitive offer, the candidate is caught in a position where they might have to ask for a much higher salary. Rather than risk looking unreasonable, some candidates in this situation may decide to walk away.
To negotiate successfully, start with a salary that's in line with industry standards but leaves room to go higher. For example, if you have a salary range of $80,000 to $90,000 for a position, you may start by offering the candidate $80,000. That way, you can reasonably increase the salary if they counter with a higher number while remaining within your budgeted range.
Do your research
Some employers begin salary talks by asking prospective employees, “What are you making at your current job?” The problem with this question is that you won't know if the candidate is telling the truth until you complete their background check. Plus, some states ban you from asking about a candidate's salary history.
In the end, it doesn't matter how much money they're currently making. It's up to you as an employer to do the research and know the market value of the employee you want to hire. Conduct market research for the role, making sure to factor in years of experience, demand for the position, and geographic location. Use online sources, such as the CareerBuilder salary calculator, to determine the role's average salary in your area. You can also review job descriptions to learn how much other companies in your industry are offering for similar jobs.
Determine salary ranges
Once you've performed some market research, you should have a better idea of a competitive salary range for the position you want to fill. Here are some additional tips to determine the right compensation for an open position:
- Look at company salaries: Once you know the industry standard for the role, compare it to other salaries within your company. Review similar roles to learn what your current employees are making, and use this information to guide your decision.
- Create a range: With the data you've collected, create a range for the position. Set a minimum and a maximum amount for the salary range, making sure it aligns with the budget you've allocated for the role.
- Consider unique factors: For every role, there may be unique factors you choose to consider once you've identified a prospective hire. For example, if they have extensive experience or numerous industry connections, you may decide to offer a slightly higher salary if they negotiate above the maximum limit you've set.
"It's up to you as an employer to do the research and know the market value of the employee you want to hire."
Emphasize the benefits
How can you appeal to a candidate's wants and needs before even beginning a salary negotiation? By understanding what's important to the prospective hire. While salary is a critical factor in many candidates' decisions, it's not the only one. Create a package that offers more than just a salary figure.
When you make an offer, emphasize all the benefits they'll earn by working at your company. These employee incentives might include:
- An attractive vacation policy
- Generous health benefits
- A flexible work schedule
- A remote or hybrid environment
- Performance bonuses
- Stock options
- A retirement plan
- Career development opportunities or programs
Why engage in salary negotiation?
In today's job market, many candidates apply for multiple roles to increase their chances of success. This strategy means they may end up with several offers to consider — not just yours. If this happens, salary may become a key factor in their decision. After all the time, energy, and resources you've put into finding the right candidate, you don't want to lose the perfect hire because of a low salary offer.
Effective salary negotiation can also have benefits throughout the employee lifecycle. Once you've hired an employee, you may need to continue renegotiating their salary as they gain experience and skills. According to a recent Pew Research Center survey, 63% of employees cited low pay as a reason they quit their jobs. By continually engaging in salary negotiation with your current workforce, you have a better chance of keeping engaged employees on your team.
Salary negotiation is a valuable tool for hiring and retaining top talent at your company. Don't let money be the reason the perfect hire slips away. Instead, follow these negotiation tips for employers to offer a competitive salary and hire the best candidate for your next open position.
More tips on hiring and onboarding
Be transparent about the salary you're offering to encourage prospective candidates to apply. Follow these tips for including salaries in your job descriptions.
When establishing salary ranges for a position, make sure you're complying with all regulations. Here's what you need to know about pay transparency laws.
Offering a competitive salary is one way to attract top talent, but it's not the only method. Consider these five creative ways to get the best candidates to apply for jobs.
Once the offer is worked out, it's time to start thinking about preboarding. Learn how to make preboarding a success.
