Helpful Essay: Employer Salary Negotiation Tips

You hold the purse strings, so salary negotiations are easy, right? Wrong. Salary negotiations are like Goldilocks and the Three Bears: You can’t be too eager and pay too much. You can’t be stingy and pay too little. You want it to be just right—for both your organization and the applicant.

To be successful at salary negotiations, you need to do your homework and play fair. Here’s how:

  1. Understand how the job and salary fit into the:
  • Industry. Are you a boom or bust industry? Silicon Valley or Rust Belt?
  • Organization. What is commensurate with what others are earning who perform similar responsibilities? Do some investigation into what each candidate currently earns and has earned in previous positions. You can get this information checking references or through W-2 forms (if candidates share them).
  • Geographic area. Does your area cost more to live in? Is it more/less desirable to live in?
  • Fair market value. What’s the job really worth? What’s the range that someone in this position deserves based on skills, experience and work responsibilities? Research sites like to obtain objective information.
  • Compare how the salary jibes with other employees’ salaries. Pay too much and longstanding employees will balk. Pay too little for your geographic and candidates will go elsewhere.

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  1. What other compensation is involved? When you’ve reached the limit of your salary caps, stretch your attractiveness to the applicant with enhanced:
  • Vacation leave
  • Personal leave
  • Moving expenses
  • Tuition reimbursement
  • Profit sharing
  • Stock options
  • Career advancement potential
  • Internal educational opportunities
  • Your reputation—won any awards as “Best Employer in the state” for example?
  • Charitable giving employee matching programs
  • Generous holiday, such as one full week off between Christmas and New Year’s
  • Anything else you that sets you apart from other companies that might win the candidates you are seeking
  1. Ask yourself how badly you need the candidate. Careful with this one. It can lead you down the slippery slope of bad judgment.
  • Too much pay and the candidate becomes a target for envy, criticism and resentment from fellow employees.
  • Too little pay and you lose the candidate—after sometimes months of interviews and negotiations.
  • Work for a win-win situation. You haven’t won if the candidate feels snookered. Sooner or later, it backfires.
  1. Check your ego.
  • Be honest with yourself. Avoid resistance based on your own issues such as automatic mental reactions to the candidate or narrow/snap judgments.
  • Expect a good candidate to counter your offer letter. Be prepared to talk about it without taking it personally.
  • Don’t play hard to get. It’s a silly game than can cost you the candidate.
  1. Communicate with fellow interviewers.
  • Have more than one person interview candidates.
  • Check in with one another to keep on the same page. Otherwise, the old he-said/she-said scenario can make you look unprepared and unprofessional when the candidate mentions something you know nothing about.
  1. Degree of risk factors for the candidate.
  • Where is your company in the business life cycle?
  • Are you getting ready to merge/sell/be acquired? If so, might that mean this position will soon be obsolete?
  • Are you a start-up company, asking people to take great risks in coming on board with you at this time of relative uncertainty about the future of your firm?
  • Are you asking them to sign severe non-compete agreements that would unrealistically hinder their future job prospects, should your company go under, or no longer need this position?
  1. Put it in writing.

Once you’ve agreed on a benefits package and the applicant has accepted the offer, pull together a letter of agreement.

Allow the candidate a few days to review.

Once the applicant has signed the letter, the deal is complete. Congratulations!