Talking about salary can be an uncomfortable topic for even the most senior leaders. Even if you have good news to share – say a spot bonus or a promotion – assigning a number to the value of an employee’s job scope is tough. The situation becomes particularly challenging when managers, who often have limited say in the compensation budgets, are the ones communicating salary matters to their direct subordinates.
The same applies when it comes to job offer negotiations. After all, finding and shortlisting the right candidate is a herculean task in itself. When you have finally found your best job candidate, the finishing line is in sight. The last step is to offer the “right” salary to win them over.
However, in today’s competitive talent market, top-notch candidates receive multiple job offers. With their increased leverage, candidates today feel more empowered to negotiate their starting salaries to justify their experience and skill sets. At the same time, job compensation data is easily accessible with the plethora of market data available and annual salary reports published by firms such as Robert Half and Glassdoor. Pay transparency is highly-valued by employees and candidates today, with three-quarters (75%) of employees believing that it is good for the business. Hence, hiring managers should not be taken by surprise when candidates start negotiating for more money than what was initially offered to them.
Successfully negotiating job offers with potential candidates requires tact and diplomacy. A little preparation on your end can also go a long way in helping you keep compensation discussions within a certain boundary that is ideal for both parties.
Know the industry standard
To successfully negotiate a fair compensation package with the candidate, you will first need to know the standard compensation rates within the industry and consider the type of role and seniority level. Leverage on salary survey vendors such as Mercer or Willis Towers Watson that produce detailed salary reports to help employers determine the market salary norms for each job and in the specific industry. Alternatively, recruitment platforms such as JobStreet also produce salary reports periodically covering broad salary ranges for jobs. These salary reports can be a helpful guide for you to determine if your compensation proposal is reasonable or not.
Have a method when outlining the details
Discussing compensation with your potential candidates should be done in two stages. During the initial interview, ask the candidates for their expected salary range. Let them know if their asking salary range is within or outside of the organisation’s budget so that they can manage their expectations. The next phase is when you are prepared to make the job offer. It is important to be thorough in discussing the organisation’s benefits during this stage as it provides you with room to negotiate should the proposed compensation package fall below the industry’s average. This stage is when you can discuss other monetary and non-monetary benefits that your organisation is willing to offer, such as allowances and bonuses, leave entitlements or insurance benefits.
Consider the value of the candidate
The compensation package offered to the candidate should take into consideration two factors: the industry standard and the value of the candidate. The industry’s average pay rate reflects what most organisations are willing to compensate based on the value of the job. Whether your organisation decides to offer a candidate a higher amount boils down to the value that you believe the candidate will bring to your organisation. Using the interview sessions to form a better picture of the potential candidate’s work ethics and skills. This will help you to decide on an appropriate compensation range that commensurate with the candidate’s value and experience.
Look beyond monetary compensation
Do not be stumped if you are unable to match the potential candidate’s salary request or if the proposed compensation package is below industry standards. There are other ways to make an appealing offer to a potential candidate. This could include provision of allowances, deferred bonuses or even office perks such as extended personal time-off, flexible work arrangements, international assignments or career rotation opportunities. In fact, according to a 2021 Robert Half report, 48% of surveyed organisations provide sign-on bonuses and 43$ are giving paid time off to entice potential hires.
Benchmark against your existing employees’ salaries
The candidate that you have shortlisted may have a stellar background but it is still imperative to offer him or her a compensation package that is within the same range as his or her peers in the organisation. After all, discussions about pay are inevitable within the office space. When unemployed find out about unfair salaries, it may lead to disengagement, resentment and morale dips.