- Michael Coulthard
12 Tips for Salary Negotiation for Employers
It is a notoriously difficult conversation to have - the dreaded salary offer. Everyone recognises that the negotiation is difficult for job seekers, after all, there is a lot of emotion, proration and fear of the unknown all boxed up together. But it can be equally as daunting for employers too.
Especially in a labour market as tight as ours, there are many layers of needs and restrictions for employers, bringing plenty of anxiety to the process for recruiters and hiring managers on the front lines of building teams. And it’s a tricky line to walk - no one wants to be responsible for blowing it with a highly desirable candidate — but you also don’t want to hire someone in a salary range that’s either unsustainable or inequitable.
There’s no shortage of content geared toward job seekers looking to negotiate a higher salary, but there’s not a lot of support for employers on the other side of that process.
Here are our top 12 tips for successfully walking that line:
1. Do Your Research in Advance
Before posting any open role, start with a solid grasp of your internal budget for the salary, then look at salary ranges on MCF Recruitment's website, here, for similar roles in your area. By conducting solid compensation analysis in advance, you ensure that you calibrate the job requirements properly — and that you’re not surprised by the job seeker’s salary expectations.
2. Clarify the Job Level Early in the Process
When there is a discrepancy between what salary a candidate is hoping for and what an employer is able to offer, it is usually because there’s a misunderstanding in job level or skill requirements. Be sure to think carefully about the job scope before posting your open role. If you add skill requirements that are "nice-to-haves", you’re more likely to attract job seekers outside of your salary range, making agreement on compensation a likely sticking point later in the process. By laying this early groundwork, you minimize the likelihood of a failed salary negotiation later on.
3. Don’t Require Salary History
Consider removing any indication of current salary from the application process. People don’t always need to increase their income with every job move, and by asking for it in advance many candidates in this situation will be perturbed as they fear their salary history prices them out of the role, which could mean your best candidates won’t apply.
4. Be Up Front
When you’re ready to post your open role, be sure to add a salary range on your job post. Research on various recruitment platforms has shown that the top piece of information users want when evaluating a job or employer is detail on salary/compensation packages. By clarifying a salary range up front, candidates will opt in or out early, minimising the possibility of coming to a salary stalemate later on.
5. Be Loud and Be Proud
Whether your salary ranges are competitive in the local employment market or not, it’s important to be vocal with the benefits your company offers. And while elements like health insurance and paid time off are important, don’t be shy about promoting the less-common benefits offered by your workplace. The unique benefits your company offers might be just the antidote to a lower salary.
6. Never, Ever, Lead with Your Best Offer
While you might be tempted to offer as much as you can when you find that perfect candidate, most job seekers assume that the starting offer is negotiable and will ask for more - whether or not the offer was within their range. When you can’t go higher, a candidate may interpret that as a sign that you’re not excited about and invested in their joining the team.
7. Let Conduct Inform Your Next Move
How a candidate acts during the salary negotiation process is highly relevant. Pay attention to how they handle interactions and use it as an opportunity to further assess fit. If the candidate’s negotiation style is fantastic, it might be appropriate to up your offer. On the flip side, if a candidate’s style is off-putting, you might choose to not budge. Sick to your red flags.
8. Don’t Withdraw Based on Budget Alone
If there’s a discrepancy between the candidate’s target income and your budget, don’t automatically write that candidate off. Instead, start an honest dialogue about the other benefits you can offer that might get it over the line. If you’ve determined that there are some benefits you offer that might make all the difference, such as WFH or flexible working, you can consider integrating it into the negotiation.
9. Leverage Data & Empathy Equally
If you need to hold firm to a certain salary cap, be sure to leverage the salary data for comparable roles from other sources such as MCF Recruitment's career page or other job boards to justify your limitation. It requires empathy, but it is OK to say that your offer is extremely competitive, while still making the candidate feel highly valued.
10. Be on the Candidate’s Side
Do not make promises that you cannot keep, be sure to hear out a candidate with an offer in hand, whether that offer is from your company, another company or both. It’s important to keep a clear head and actively listen. Don't take too long with a counter offer and in the same respect, do not act on impulse either. Take the time to truly listen to the candidate’s needs. Pay close attention to how they’re leaning and be sure to look for low stakes ways of accommodating their needs. Sometimes just feeling more “heard” at one company versus another is all it takes to tip the scales in your favour.
11. Make Peace but be Firm
There will be times when you simply can’t go any higher during salary negotiation, even though you really want to, and that is OK. Be as genuine and honest as possible when conveying how you really wish your budget allowed you to go higher. Talk about one of the things you love about your company is how responsible it is with budget, which is likely to lead to great, sustainable growth. Two good outcomes can come out of this approach: Either your candidate will love how you handled it, agree that they want to work for a great, sustainable company and say yes to the offer, or pass on this opportunity but keep you in mind for the future.
12. Close Positively
Whether you found agreement on a salary, or your candidate declined your offer and moved on, do your best to end the interaction on a positive note. Especially if the negotiation was a lengthy process, it might be tempting to quickly drop communication with a candidate who has chosen to walk away from an offer. Wish your candidate the best of luck and encourage them to stay in touch. You never know when they, or a connection of theirs, will knock on your door.
Ultimately, you must balance staying in budget with hiring the best person for the job - it is a tight trade off and a very fine balance to establish. If, at the end of the process, regardless of length and if you won the candidate or not, you know you have completed your due diligence as an employer. You can take comfort knowing that it is a tricky prices for all involved, but one that when done right, can be an extremely rewarding process.