How to Negotiate Salary with New Employees

After receiving a potential employee’s response to your offer, be prepared to negotiate. Job seekers today have access to an abundance of information on salary negotiation through websites and books, so most will enter the meeting knowledgeable on the topic. To reach a fair deal, you need to be equally prepared.

How to decide how much you’re willing to negotiate for an employee’s salary

The first step is not unlike that in any other form of bargaining. If the candidate suggests a higher figure than you’ve offered, you can choose to raise the amount of your proposal or stick to your guns. If the candidate keeps pushing, whether you want to exceed the established range generally depends on two factors: how badly you want the person and the policies and precedents in your company.

Ask yourself three questions before you start promising the moon:

  • Are other, equally qualified candidates available if the applicant says no? If the answer is yes, the leverage to make accommodations rests with the company.

  • Has the job been particularly hard to fill, or are market conditions making finding and recruiting suitable candidates difficult? If the answer is yes, the leverage rests with the candidate.

  • Will a stronger offer be significantly out of line with existing pay levels for comparable positions in your company or hiring manager’s department? The lack of a reasonable degree of internal equity in compensation levels diminishes the spirit of teamwork and fairness.

Recognize that if you decide to go beyond the firm’s pay scale to win a stellar candidate, you risk poor morale among existing staff should they learn that a new hire in the same role is being paid at a higher rate. Best-kept secrets often do get out. In addition, paying above scale may create a legal issue if the pay isn’t equitably distributed among the members of your workforce.

Non-monetary incentives to entice a potential employee

If you’re not able to match a candidate’s salary request, consider expanding other components of the package. Applicants often are willing to compromise on base compensation if concessions are made in other areas.

Flexible scheduling is one candidate-pleasing option that will cost you little to nothing. Providing additional time off or opportunities to telecommute may also be acceptable to a candidate in lieu of higher wages. Also, consider a signing bonus (see the nearby sidebar) or a performance-based bonus after a specified time period.

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