How Everyone Wins At Salary Negotiations

About the Author: Tom Wood is the founder and President of Watershed Associates, a Washington D.C. based consulting firm specializing in negotiations and negotiation training.  He is the coauthor of the workshop series Best Negotiating Practices.

It's a long process, this business of recruiting, interviewing and selecting a candidate for a position in your company. But eventually, you will reach the point where you're ready to make an offer; the candidate has indicated that he or she will likely say "yes." And now the fun begins.

If you commence salary negotiations the way most hiring managers do, you focus on a pay range that's available for that particular position, and open discussions at the low end. The rationale here is that it gives the employee room for advancement without necessarily needing an actual promotion. But, in truth, your marching order really is, "Get the most employee for the least amount of money." And, if the employee isn't a savvy negotiator, so the reasoning goes, well, so much the better for the company. But if the employee demands more, again so the reasoning goes, it gives the company some insight into how demanding that employee might be in the future. And, if that employee is really demanding, talks just might break down.

"In this tight labour market, the deal is really yours to lose." So what do you stand to gain out of this old negotiations model? The savings of a few thousand dollars, which amortized over the course of a salary year, doesn't really add up to much. What do you stand to lose? Rare, hard-won talent could slip through your fingers, and worse, perhaps you will lose that candidate to your competitor. But even though both of you might be equally interested in the other, in this tight labour market, the deal is really yours to lose. So here's where negotiating becomes a selling tool for you.

This is the time when the candidate is putting the company to the test for the first time. How flexible ARE you really? How invested ARE you really in the employee's future? How good a listener IS the company really? How committed IS the company to the principle that employees are its greatest asset? In some ways, the outcome isn't nearly as important as the process. The WAY you negotiate -- not so much the final deal -- is going to determine whether that person is going to take the job.

Before dollar signs start swimming in front of your eyes, it's helpful to understand that meeting an employee's "demands" does not necessarily break the bank. Negotiable terms can include not only salary, but also benefits, the working environment, amount of flexibility the employee might enjoy.

Here are some tips for helping you achieve world-class negotiations and land the job candidates of your dreams:

  • Do leave room to negotiate, start low but be reasonable. Unreasonably low-balling a salary offer could stop the conversation before it really starts.
  • Avoid single-issue negotiations. A single issue, for instance, is salary. But perhaps there are other motivating factors for your candidates: Do they like to travel? Are they committed to continuing education? Is high visibility important to them? Tuition reimbursement, leave without pay, paid conference attendance can all be folded into a final employment deal.
  • Never devalue your product.  In this case, the position being negotiated. Emphasize the future potential for growth and continuing employability.
  • If a low salary is absolutely non-negotiable, try to agree to an earlier salary review.
  • If the candidate's demands are beyond your sphere of influence, remind the candidate that the terms are company policy and that, personally, if you could meet them you would. Continue to reinforce the overall environment and that you are both on the same side. The shared goal: A perfect employment match.

But there's more flexibility than most of us are aware of in salary negotiations. Here are some of the elements of an agreement that are the most negotiable:

  • salary
  • benefits
  • signing bonuses
  • performance bonuses
  • job responsibilities
  • review
  • profit sharing
  • equipment
  • flex-time
  • tuition, training, education
  • job description
  • severance
  • professional association memberships
  • corporate credit card
  • types of projects

As a hiring manager, you have one of the most creative positions in the company. And the results of your dedication are immediately obvious and measurable.

Where once the final line of the conversation might have been, "Congratulations you've got the job,"..... things have changed.  Now you're now waiting to hear: "Congratulations, I'll take the job."

And isn't that music to your ears?