How to Negotiate Salary With Job Candidates

After receiving a candidate's response to your offer, you must be prepared to negotiate. Job seekers today have access to an abundance of information on how to negotiate salary through websites and other resources, so most will enter the meeting knowledgeable on the topic. To reach a fair deal, you need to be equally prepared.

The first step is not unlike that in any other sort of bargaining. If the candidate suggests a higher figure than you've offered, you can choose to raise the amount of your proposal, waiting for the candidate to respond or counteroffer, and, ideally, arriving at an agreement that's within the salary range you've set for the position.

How to Decide to Negotiate Salary

If the candidate keeps pushing, whether you want to exceed the established range generally depends on two factors: How badly you want the individual and the policies and precedents in your company. When considering how to negotiate a salary offer for a particular candidate, some questions small businesses should consider include:

  1. 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.
  2. 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.
  3. Will a stronger offer be significantly out of line with existing pay levels for comparable positions at your small business?

Remember that the lack of a reasonable degree of internal equity in compensation levels diminishes the spirit of teamwork and fairness. Recognize, too, that if you decide to negotiate salary and go beyond the firm's pay scale to win a really 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. And the best-kept secrets often do get out. If you're not able to match a candidate's salary request, consider expanding other components of the package. Applicants are often willing to compromise on base compensation if concessions are made in other areas.

Flexible scheduling is one 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.

A signing bonus is a sum of money that is offered as an extra inducement to the candidate to join the company. The signing bonus is exactly what it seems: An upfront cash payment that you give to an employee at the start of employment, independent of salary. The benefit to employees? Cash in their pockets. The benefit to employers? It may help you secure the employee you want without distorting your salary structure.

If you use signing bonuses, however, it's a good idea to make them contingent upon a specified period of employment. For example, the new manager will receive a signing bonus of $10,000 as long as he or she is employed with your company for a period of at least one year.

Don't get so caught up in learning how to negotiate salary that you lose sight of what is appropriate for your organization. Sometimes, you just have to walk away. If your attempts to woo a reluctant candidate fall short, the best thing to do in many cases is to cut your losses and look somewhere else. The goal at this point should be to end the process so that the candidate leaves with a feeling of being treated fairly and with dignity. If carried out effectively, though, your salary negotiation has a very good chance of ending on a positive note.