How recruiters should approach salary negotiations with future employees
One of the most satisfying things after a long interview process is finding your desired employee!
An employee who can be an exceptional performer, with the right skills, qualifications and personality.
Now, a crucial step before their employment is finalised involves salary negotiations.
It is important to remember a few important things before negotiations begin and adopt the right approach.
What is the right approach to salary negotiations for recruiter?
Be open-minded
Firstly, if you are entering a negotiation with anyone, be prepared to speak as well as listen. Very often salary negotiations fall apart or remain stagnant because one or both parties are not willing to compromise. It is critical that you establish what decision works in your company’s best interest. However, also be prepared to accommodate the other party to a reasonable extent.
What you should do before negotiations.
Perform job analysis
A job analysis is more than assessing the contents of a job – the skills, knowledge and capabilities required to perform. A proper job analysis also evaluates the context of a job – it’s worth to the company, opportunities for career progression and appropriate compensation. Assessing the career value of this position helps recruiters establish a suitable compensation package.
Establishing a salary range
When determining salary, consider the industry value of that position. What are organisations paying individuals who work in a similar capacity? This is a suitable for benchmark jobs – operational jobs that are existent across many industries.
They include accountants, middle management and clerical positions. As these positions are widespread, salary data could be collected. This data determines a job’s industry value and appropriate salary range.
What is your company’s budget?
Aside from industry data, you need to consider your compensation budget. Budgets identify how spending ought to be allocated and limits. Ensure your salary range remain within budget.
What is your company’s compensation philosophy?
Your company’s philosophy involves the reasoning behind its salary structure. For example, to what extent is salary used to attract and retain high-performing staff? Is there an emphasis on using financial rewards to motivate staff for business success?
Your organisation’s salary budget and philosophy work particularly well for non-benchmark jobs – unique or specialised roles. These include legal advisors, business consultants, marketing strategists or sales executives. Market data may not be readily available for such positions because they are customised for each organisation they serve. Understanding your budget and company’s policy on compensation, will determine an appropriate salary range.
Establish your non-negotiables
Salary may be negotiable, however there are other benefits and rewards that form part of a compensation package which may not be on the negotiating table. These items may be fixed depending on an employee’s rank or level of service within the company. These include insurance benefits – life, medical, dental or vehicular, as well as financial rewards such as retirement plans, bonuses or commission structures.
Offer benefits package
Complete your compensation package by including other non-financial benefits alluded to a working employee such as time off – personal/sick days, paid vacation, maternity, travel allowances, bereavement and use of company vehicles, cell phones or credit cards where necessary.
What you should do during salary negotiations
Once you have performed the job analysis – both content and contextual, you should have a reasonable proposal to lay on the table.
Be upfront with your offer
Be clear, direct and to the point. Based on the job, company and industry assessment, lay your cards on the table and propose what you can offer in terms of salary and other benefits. Knowing your salary range, do not propose your highest offer right away. Instead, place an offer just slightly above your lowest threshold as a starting point. Be prepared to listen in the event they have a counter-offer.
Entertaining a counter-offer
When interviewing an employee for a managerial or non-benchmark position, it is critical that you understand this is an employee with industry experience and knowledge. Based on this experience, they may also know their worth and have a standard below which, they are not willing to compromise. Therefore, take into careful consideration their counter-offer and identify whether or not, it falls within your projected salary range.
Know your limits
If their counter-offer is within a reasonable margin of your initial salary offer, you can re-assess once you anticipate the high value they will bring to the organisation. If a rise in sales revenue, decrease in operational cost or competitive advantage will be derived from their employment, feel free to consider, once you are certain their contribution is not subpar to the compensation they’re asking for.
If their counter-offer exceeds your maximum salary limit, this does not necessarily mean that negotiations have to fall through immediately. Once sufficient justification is provided and proven by the candidate, you can adjourn to determine if the budget can be adjusted to accommodate. There will however, always be a maximum threshold that cannot be exceeded.
Keep that threshold in mind, even if you anticipate exponential value from this candidate. You don’t want to be that company paying more than what competitors offer, yet receiving less value than them from your human talent.
What you should do after salary negotiations.
Give them time to think
Not all negotiations come to a final decision in one session. Parties generally lay their best offers on the table and reconvene at a later date to determine if a conclusion is reached. The same can be applied to your salary negotiations. Place your best, reasonable offer to the candidate, taking into account budget, expertise and anticipated value. Parties can always meet a few days later to provide an answer and dissolve any additional concerns.
Stay connected to the candidate
Provide sufficient time to re-assess the negotiations and any potential new offers. Three to five business days is fine in these scenarios. Keep the communication open and active, particularly if you have not heard back from them within the mentioned timeframe. When communicating, determine if any minor concessions need to be made or if it is still a viable option to pursue this candidate.
