The Art of Salary Negotiations: Strategies for Employers and Candidates
by Keith Brown, President & Owner, Siena Group.
Making and accepting a job offer is a question of balance. It’s NOT about winning or losing; it’s about reaching an agreement where BOTH parties feel valued. Amid a global talent shortage, businesses have the unique challenge of prioritizing the recruitment of experienced workers. Salary negotiation is a potential success strategy for differentiating organizations from their competitors. Therefore, companies need to know how to be flexible without undercutting their bottom line, while applicants need to know their value while not asking for more money than is available.
Understanding the Importance of Fair Compensation
Fair compensation must benefit both employees and employers. A salary shows a team member’s value, reflecting their skills, experience, and importance to the company. Competitive salaries help the team – both existing and prospective new members – understand how they fit into the company and foster retention. Also, remember to maintain a healthy work-life balance as money only goes so far.
It’s important not to outstrip your existing team members relative to the overall equity in the organization. “Fair” means affordable for the company as well as beneficial for the new employee, and dare I say it again, to the existing employees. Salaries are confidential but do be careful not to create another problem 1, 2, or 3 years down the road. The key: when the business grows and increases its profits, everyone benefits.
Preparing for Salary Negotiations as an Employer
Employers can take the following steps to ensure a successful salary negotiation during the recruitment process:
- Make sure any job posting or salary discussion is compliant and legal, and don’t prevent existing employees from sharing information about their salaries if they want to. Though all salaries are held in confidence, you, as the employer, can’t assume that they aren’t being discussed at some levels of the organization.
- Ensure salary offers are fair, equitable, and non-discriminatory.
- Consider if bonuses or other additional monetary rewards are possible or appropriate.
- Research current salary data for the role in question.
- Ensure you have a process in place for gathering feedback on your recruitment process. That way, you can understand if your salary negotiation techniques are causing job applicants to go elsewhere.
You could also prepare to offer a probationary period during which the candidate would receive a lower rate of pay, and if they perform at a high standard, you could then increase the pay rate. This could be a good compromise for companies that want to know they’re making a good investment. There are a number of ways to navigate this approach and, though it can be effective, this market dictates caution as top talent may be receiving multiple offers.
Tips for Candidates During Salary Discussions
Although applicants may come to an interview wanting more money than initially advertised on the job posting, not everyone is taking the step to try and negotiate a higher salary. Many don’t feel confident or comfortable asking for more money, particularly women and younger workers.
To gain confidence and ask the right questions, candidates can try the following tips:
- Research current salaries for the role and other data such as bonuses or commissions.
- Decide on an absolute minimum salary and refuse to go below that, but don’t lead with this figure during negotiations.
- Create talking points on why this salary is appropriate e.g., achievements at previous company, specific and sought-after skillset, or other differentiators.
- Don’t accept a job offer straight away. Ask for time to think about the role and salary and be sure to take note of any deadlines.
- If you’re working with an outside recruiter, be open and number with your minimum and maximum numbers. Remember, the best recruiters are always working to get a win-win!
Applicants should know their value and aim high, but not so high that recruitment professionals write them off immediately. To that extent, there are several great articles and websites for your review:
- Forbes 10/18/23 article “19 Tips to Keep in Mind When Negotiating a New Senior Management Role” highlights a multitude of things to consider for those seeking an executive-level role –especially for those just getting into that level of accountability.
- Harvard Business Review article 9/6/23 “How to Negotiate Your Salary in the Age of Pay Transparency Laws” also highlights key tactics in the negotiation process. Ironically, it actually states to not “focus on fairness.”
- US News & World Report 9/8/23 article “What to Say When Negotiating Salary in a Job Offer” is yet another one that shares a lot of the same things: be prepared, have the right information on hand, and practice your approach.
- Location makes a huge impact on the cost of living and can heavily influence the salaries in local markets! City-Data.com is one of our “go-to” websites to learn specific information about a particular city. We look for the cost of living percentage in order to get a feel for a place that, in turn, influences the salary in that location.
Negotiating Non-Monetary Benefits and Perks
Benefits can be a vital part of salary negotiation. Health insurance, vacation days, and other standard benefits are great… but there are significant differences that exist! So, do your homework!
- Health Insurance: Make sure you understand the monthly premium costs, the out-of-pocket potential, and the overall coverage. Not all plans are created equal, so do the work.
- Vacation days/PTO: Not all plans are created equal. I know that I just said that, but sometimes repetition is for a purpose. Two weeks is very common as a starting point – even for someone who’s worked for 25 years. Though I have strong opinions about this topic, the point is to know not only the total PTO (definitely negotiate up if you are the candidate and be willing to be flexible if you are the hiring manager) but also how it is earned over time.
- Investment Plans: For 401(k) and other investment plans (profit sharing, etc), don’t assume and definitely ask. This one has more commonality across companies than most, but it is always best to go in knowing what to expect rather than being surprised.
- Job Development: Career progression opportunities and on-the-job learning and development are key components and an essential part of the package. Nothing is guaranteed one way or the other, but knowledge is power. According to recent reports, 71% of employees state that development increases job satisfaction, with 61% citing it as a reason to stay with a company – easily one of the most powerful things to understand as an employer!
- Flexibility: Flexible working is also a top priority for many candidates and can benefit businesses by boosting productivity. Though remote work adds flexibility to some industries, it is less so for manufacturing companies given the nature of the work. There are ways that manufacturing companies can incorporate flexibility into their work week without losing value to the bottom line. No matter the industry, the focus should always be a willingness to adapt.
Companies: Consider what’s important to your candidates and what sets you apart.
Candidates: Make sure you’ve thought through the same thing and be able to articulate what makes you different/better. When you get to the offer stage, remember to be specific about the things that are important to you (salary, variable comp, the benefits package, vacation, etc).
Reaching Win-Win Agreements in Salary Negotiations
Employers and candidates should both come away from salary negotiation talks feeling satisfied and excited about the next steps in the recruitment process. It’s important for both parties to be flexible and transparent, so there’s no confusion or disagreement later down the line. A key recommendation on this process: assume you have only one and maybe two shots at the negotiation table. Continued back and forth multiple times turns thing sour and can lead to a rescinded offer!
Remember to leverage the external recruiter you are working with when it comes to negotiations! We are trained to get to win-win and are a great go-between in the entire process. The right partner can broker a deal that delivers for everyone involved; just that one level of separation provides the necessary barrier to ensure success going forward.
Successful salary negotiations lead to mutually beneficial outcomes. Businesses gain the added benefit that new hires who are happy with their salaries will tell other top talent in their circles, increasing the chances of hiring more applicants looking for a great place to work!
As you can see, there are no secrets here. Whether you are the organization (hiring managers, HR, etc) or the top talent being recruited, the same things apply: be prepared and have a knowledge of the market, understand the challenges that exist, adjust and align expectations, be transparent and open, weigh the tangibles (salary, variable comp, benefits) and the intangibles (location, culture, growth opportunities, and more), and be flexible.
“In the long run, if it isn’t a win for both of us, we both lose. That’s why win-win is the only real alternative in interdependent realities.” (Stephen R. Covey)
At Siena Group, we are your Thermoforming Talent Partner! We’re here to help in any and every way possible! With more than 30 years of experience in manufacturing, hiring & recruiting talent, we bring a greater understanding of the companies we partner with and the candidates we pursue. Let’s Strengthen Your Search!
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