Businesses have the unique challenge of prioritizing the recruitment of experienced workers amid a global talent shortage. Salary negotiation is a potential success strategy for differentiation organizations from their competitors. 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 worker’s value, reflecting their skills, experience, and importance to the company. Competitive salaries help staff maintain a healthy work-life balance and discourage them from quitting.
However, it’s important not to put all the business funds into the recruitment budget. “Fair” means affordable for the company as well as beneficial for the employee. After all, 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.
- 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 up that pay rate. This could be a good compromise for companies that want to know they’re making a good investment.
Tips for Candidates During Salary Discussions
Applicants may come to an interview wanting more money than initially advertised on the job posting, but 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.
Candidates can try the following tips to gain that confidence and ask the right questions:
- Research current salaries for the role and other data such as bonuses or commission.
- 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.
Applicants should know their value and aim high, but not so high that recruitment professionals write them off immediately.
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 will more than likely be similar to what’s offered by competitors. Consider what’s important to your candidates and what sets you apart. Can you guarantee them career progression opportunities and on-the-job learning and development? 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.
Flexible working is also a top priority for many candidates, and can benefit businesses by boosting productivity. Creating a working week that matches the needs of applicants could help employers move through salary negotiation faster and with better outcomes for both.
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.
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.
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