Whether you have the “Seven Year Rule” requiring you to drive a car for seven years before buying a new one (me), or trade in and up every other year, buying a new car is exciting. Before you can drive that car off the lot, there is one, often dreaded, hurdle to cross. Negotiating for the best price. The questions you ask yourself before price negotiations with the car salesman are strangely similar to the ones you ask yourself as a hiring manager during salary negotiations with a candidate. What is the market value of this car? How badly do I want it? Is my 2nd choice good enough if my 1st choice is too expensive? Going into car price and salary negotiations well equipped will give you the winning edge.
What’s Your Blue Book Value?
Do your homework. How much should I pay someone to do this job? There are many factors to consider including what your competitors are paying. Salary surveys are among the numerous resources available to help you answer this question. A salary survey is a tool used to determine the median or average compensation paid to employees in various jobs, often focusing on geographic region, industry and employer size. There are human resource associations (e.g., Society for Human Resource Management), online vendors and even government agencies (e.g., the DOL Bureau of Labor Statistics) that perform salary surveys. Some require membership or charge for the service, and others are free and available online. Know going into salary negotiations what the candidate is expecting based on what others are paying.
I Need Some Breathing Room
No one likes to be backed into a corner, especially when negotiating. In salary negotiation speak, breathing room takes the form of a salary range. As soon as you have a job vacancy, determine the salary range for the position. A salary range is not arbitrary. It must take into account the organization’s pay philosophy among other factors. Pay philosophy considers an organization’s view of and approach to base salary, incentive pay such as bonuses and stock options and benefits which are non-monetary awards. Does your organization want to pay more than its competitors to have a better chance at securing the best talent? If that isn’t economically feasible, maybe your salaries are consistent with the competition’s in which case you highlight your cutting-edge benefits, generous leave policies or flexible work arrangements to set you apart from the competition. By law, pay practices must be consistent and not discriminatory. However, a pay philosophy may approach different types of employees differently. For example, you may decide to offer a salary range consistent with the market for your sales force and offer a salary range that exceeds what the market is paying for a computer engineer with a very specific skill set in a position that is challenging to fill. Determining salary ranges is a fluid process. Just as the market changes, so must salary ranges to remain consistent with your pay philosophy.
Let Me Do the Talking
If your budget is tight, you might be able to encourage candidates to accept lower compensation in exchange for other benefits. Find out what is important to the candidate by asking her what benefits matter most to her. If the candidate says she had an hour long commute at her last job and would love to work from home a few days a week, seize the opportunity to brag about your new telecommuting policy. If it’s vacation days she wants, mention that your company closes up shop the last week of every year. If she mentions a desire to give back and help others less fortunate, talk about the paid “volunteer day” all employees are entitled to each year. If she seems interested in sports, tell her about your company’s softball team and how much fun you had learning to play last season. Savy job seekers understand base salary is only one part of what makes a job desirable and will want to hear more about benefits, recognition programs, professional development opportunities, mentoring programs and volunteer opportunities.
Take it or Leave It
If a candidate requests a salary above your budgeted amount, ask yourself a few questions. How hard has this position been to fill? Are the best-qualified candidates getting hired before you can even schedule a first-round interview with them? If so, it may be worthwhile to exceed your budgeted amount and offer a desirable salary to avoid the costs of continuing to recruit for the position. Also ask yourself whether your 2nd and even 3rd choice is equally qualified for the position and how likely he or she may be to accept an offer. If you have an equally-qualified candidate in the wings, it may be best to end negotiations, thank the candidate for her time and move on to your 2nd choice.
Step Into My Office
Office space can be a benefit in and of itself with many companies upgrading office spaces to make them more appealing places to work. Show the candidate your break room where employees can choose from among different brands of gourmet coffee pods while playing ping pong. The candidate may see the leftover bagels from the morning staff meeting and know she can count on breakfast during meetings at your company. Walk by the recognition board with pictures of the smiling recipients of the Customer Kudos award. Introduce her to the founder of your company’s book club who can tell her about the latest book the group is reading. Candidates want to get a feel for your company’s culture and what it would be like working in your office. Even if you don’t have a ping pong table, you have friendly, engaging employees who can make her feel welcomed and want to work for you.
HR Support
These negotiating tips can help you cross the finish line by persuading a good candidate to accept your offered salary. However, many HR systems should be in place before negotiations begin. Whether you need assistance identifying the appropriate salary survey for your organization, determining salary ranges for varying positions, creating job descriptions, creating pay bands, recruiting for challenging positions, coaching hiring managers on legally- compliant interview questions, developing an onboarding process and orientation program or drafting total compensation statements, Smart HR can help. Call us today to set up an initial consultation.
