You’ve chosen a candidate – congratulations! But you’re not done yet. You have to seal the deal with a final negotiation. You don’t actually have the candidate until you’ve completed the negotiating phase and they’ve signed on the dotted line. To some, this is their favourite phase. A chance to flex their muscles and show their bravado. But to many, it’s a scary proposition, on both sides of the table.
Let us never negotiate out of fear. But let us never fear to negotiate.
– John F. Kennedy
Negotiating should be, in my opinion, the first step towards building a relationship between yourself and your new hire. Since you’ve selected this person to join your team, now is your chance to show them their value while building a compensation package that works for your company.
Make the package appropriate to the role.
One mistake employers make is they simply guess what the role should be worth. They might also try to decide what they can afford to pay. This is not the approach you’d want someone taking when they hired you, so give it some thought. There are plenty of places out there to get information before you ever start negotiating. You can:
- Look at what the last person in the role was given and adjust for market changes. Obviously this only works if you’ve filled this position in the past.
- Check out sites like Payscale for salary information.
- Speak to a recruiter. If you use Search Party, you’ll get the help of a recruiter for every hire.
- Reach out to your network. Maybe you’ve got a partner who has hired for these types of roles before or entrepreneurial friends who can provide you with advice. Your network is always a great place to gather information for negotiating.
In order for the negotiations to be mutually beneficial, being fair and prepared will put both parties at ease regarding being taken advantage of. You wouldn’t try to charge $5000 to rent out a studio apartment in a city where every other studio apartment was renting for $1200 a month. By the same token, you’re not going to attract top talent if you try to pay your web developer or accountant $15,000 a year. In Sydney, Australia, median salary for an experienced web developer is AUD$73,896, so you’re going to have to develop a package that is close to that figure for any quality talent to be interested.
However, a compensation package is more than salary.
If you’re trying to save some money or don’t have the budget to offer top salaries then you have to get creative. Fortunately you do have some wriggle room, especially if you really paid attention to what the candidate was saying in the interview.
When negotiating, it’s possible to find ways to build a competitive package beyond just salary.
Depending on the the type of role you are hiring for you may be able to find solutions that work for both parties. This is where communication is vital. Meaning, a mutual understanding of the job (through a well written job description) and tailoring the package to the individual, not just the tasks for which you’re hiring. For example:
- Candidates who value flexibility or results-based work environments might be willing to take a little bit of a loss on salary if they are allowed to work from home, set their own hours or get more personal and vacation time.
- Candidates with families may be swayed by offering a great medical and dental plan.
- Candidates who are willing to take a risk might be eager to take part in a profit sharing program. It’s a great way to spread the wealth of a growing company and works as a great incentive and motivator
You should see the compensation offer you make as a starting point for negotiations. Don’t be offended if a candidate tries to talk you into a better offer. The best candidates will!
Developing a compensation package that’s a win-win for both of you is crucial to successful negotiating. Prepare yourself by knowing what you can budge on, and what you can’t, and be ready to both entertain and offer creative solutions. Adopting a “take it or leave it” mentality doesn’t help you in the long run, not if you want to retain the hire. Remember, you picked them for a reason and it probably wasn’t to lose them to a better offer in a year.
Search Party can make your entire hiring process easier. From finding the right candidate to negotiating an offer. Sign up for a free account and let our online recruitment marketplace save you time and money on your next hire.