Job Offer Negotiation
What Is Job Offer Negotiation?
A job offer negotiation is when you, as the employer, negotiate the terms of employment with the candidate you made an offer to. Negotiations typically begin after the candidate counters your initial job offer.
For many reasons, job offer negotiations can be tricky to navigate. Many candidates tie their salary directly to their self-worth. If negotiations feel unfair, they might drop out. On the other hand, HR needs to be careful not to make job offers that sacrifice the company’s business strategy. Offering candidates too much money can cause other budgeting and compensation issues.
Although negotiations can be difficult, there are things you can do to prepare.
How to Successfully Negotiate Your Offer with a Candidate
The last thing you want is to make it all the way to the job offer stage with a candidate before they discover the salary is significantly lower than they expected. This can lead to lengthy and tense negotiations, and it can possibly result in losing the candidate. It can also lead to losing other top candidates since investing your time in the candidate you initially chose will delay the process for others.
The best thing you can do to prevent this is to set expectations early on. During the informational interview, you can provide the candidate with a general salary range for the position. You can also let them know some basic details about compensation packages with your company. Depending on your industry, you might consider adding a salary range to your job posting or creating a web page that discusses the company’s competitive benefits. For example, most public sector jobs will provide specific salary ranges for all positions.
Be Genuine and Transparent
During recruitment, you and your team are in charge of first impressions. This is a big responsibility, and it’s extremely important that you build trust with the candidate.
Although you don’t have to show all your cards, be transparent about what your company is capable of offering. If you know you can’t meet their counteroffer, let them know this along with what you can offer them.
Research Average Salaries
Before you enter negotiations with a candidate, research the average salary for similar positions. Knowing what the average salaries are will help you measure the true value of your job offer. When comparing salaries, be sure to account for the following.
Cost of Living
Salary negotiations with candidates usually center on a money amount regardless of location. However, a salary can be worth more or less depending on where they live. A person who makes $70,000 in San Diego could afford significantly more if they were making that amount in Ann Arbor, Michigan.
Qualifications and Experience
Just because another company added the same title to a position doesn’t mean it’s the same job. While researching salaries, make sure to compare the job qualifications in the job description.
Some companies will inflate their salaries but provide fewer benefits. If this is the case, their offer could actually be worth less than the average.
Be Proactive About Anti-Discrimination
Underrepresented groups still experience pay discrimination. Just this year, Payscale found that women still make $0.82 to every dollar that men make, and men of color still make less than their white counterparts.
Although discrimination persists, there are laws in place to help prevent pay gaps between underrepresented groups. These laws apply to qualified candidates during recruitment. Below are some of the most common protected classes to keep in mind while negotiating a job offer with a candidate:
- Sex/Gender (including pregnancy and sexual orientation)
- National origin
- Genetic information
States have additional protected classes that may apply to you.
The most important thing to keep in mind is that preventing pay discrimination isn’t just about following the law. Pay gaps also lead to poor morale, distrust and turnover. In a negotiation, it may lead to losing your top candidate. Pay equity, on the other hand, will help your company succeed.
Keep the tone of the job offer negotiation positive, even if it doesn’t work out. Maintaining a positive tone with the candidate will give them a preview of how they will be treated once hired and ultimately improve your chances of hiring them. If they decide to take a competing offer, leaving them with a positive impression of the company can bring them back or attract other great candidates.
When a candidate gives a counteroffer, you might feel pressured to give them answers right away. This is normal. After all, counteroffers feel like a yes or no question.
In reality, when you enter salary negotiations with candidates, the first thing you should do is ask questions to fully understand what they’re looking for. Do they really want a higher salary? Or, will they find value in other benefits that improve their work-life balance, like flexible hours, more vacation, or remote work options? By understanding their needs, you might be able to redirect negotiations toward more creative solutions.
Job offer negotiations often over-focus on salary negotiations with candidates. This happens because when candidates counter a job offer, they usually ask for a higher salary without mentioning other forms of compensation or benefits.
However, compensation comes in many forms, not just salary. If you find yourself in a job offer negotiation, get creative by incorporating other forms of compensation and additional benefits into your new offer. Reframing your negotiations to emphasize other compensation and benefits can help move negotiations forward and keep your offer competitive, even if you can’t meet their salary expectations.
Creative Compensation and Benefits to Offer a Candidate When You Can’t Meet Their Salary Expectations
Below is a comprehensive list of compensation and benefits other than base salary.
- Merit pay
- Overtime pay
- Phone, hotel, travel and other cost allowances
- Signing bonus
- Relocation assistance
Health Benefits and Retirement
- Medical, dental and vision insurance
- Retirement plans
- Life insurance
- Stock options
- Profit sharing
Training and Career Development
- Tuition reimbursement
- Student loan repayment assistance
- Training and development allowance
Work-Life Balance Benefits
- Generous flextime
- Remote work
- Vacation time
- Parental leave
Other Tips for Conducting a Successful Negotiation
Going the extra mile can help win top candidates over. Here are a few tips to help you really impress a candidate either before or during negotiations:
- Make it Personal. Have a recruitment representative or the hiring manager call the candidate personally to reiterate your excitement and let them know you’re willing to negotiate.
- Have Company Leadership Follow Up. Have leadership call a candidate personally to congratulate them on the offer. This gesture shows candidates that your company truly cares about hiring them. It also shows them that employees are not isolated within their teams and that company leadership is approachable.
- Send Company Swag. Everyone likes receiving gifts. If you have the budget, send the candidate some good company swag to welcome them.