Negotiate a Job Offer if You Are the Employer

Even in an employer-sided market, presenting and negotiating a job offer with an ideal candidate can be a nerve wracking situation, especially in small employer situations where you're not able to call on human resources. On one hand, you want to present the best deal you can, but on the other hand, you don’t want to give away the farm to land the candidate.

Negotiating is an art that comes with practice rather than a skill you can grasp just through reading; however, you can implement a few steps to enhance your negotiating strategy to not only land the best candidate but to also get a deal that works well on your books.

Steps

  1. Before you extend an offer, determine your absolute limits and where some less costly "perks" might come in. By limits, this means the resources beyond which you can't go, no matter how amazing the candidate. Don’t promise the moon and the stars to a great candidate if you can’t deliver. Break down your offer in terms of salary, benefits, vacation and additional perks. Some ideas beyond the normal salary include:
    • Don't forget to make use of perks that don't cost you much but that still gain a great deal for both you and the employee-to-be. For example, throwing into the agreement that the employee can choose 5 at-home working days will still see the work getting done,has the employee whooping for joy and hasn't cost you much at all, other than perhaps ensuring secure and effective at-home computer and internet access.
    • Add in an additional week off over the Christmas period or any other period where work dies down. Try to use a time when there are two public holidays in the same week if possible, and this "extra week" will only cost you three days more and you get a happy employee with an additional week off!
    • Consider the possibility of a signing bonus, annual performance bonuses and shares in the company that accrue at various longevity/performance milestones.
    • If you have the wherewithal to provide a car, consider fuel and maintenance costs and upgrading for performance as other perks.
    • If there is a move involved, consider ways to keep down the costs, including whether the candidate would be happy to forgo this assistance.
    • Make sure that all perquisites added are legal and appropriate.
  2. Another way to ascertain if you can deliver a competitive offer is to see what the other guys are presenting. If you work in an industry where business is transparent, contact other human resources professionals to ask what they’ve offered candidates to fill a similar position and to evaluate your offer. However, if you can’t get the information directly from others, conduct independent research on salary and benefits to determine if you are within range. Sites like Monster or Salary.com offer resources that can help.
    • Sometimes a candid call to another boss in your industry can get a direct answer on salary ranges. However, some bosses may be cagey out of fear you're out to poach their best! Only ask for range estimates, not for specifics of anyone they employ in particular.
  3. Be smart. Keep room for negotiation within the initial salary offer price. In one survey, 100 percent of the companies said that it was reasonable for a job candidate to negotiate for more compensation and at least 90 percent of them had already accounted for this expectation in their initial offer.[1] In other words, don't offer the candidate the uppermost amount you have available, or the negotiations will be harder and you risk losing the candidate because they'll see you as being stubborn or inflexible (which could mean they also interpret that working with your company will raise the same issues).
    • Naturally, the benefit to you of taking this approach is that if the employee fails to negotiate higher but is happy to take the job at the first salary offered, you've saved money.
  4. Deliver the offer you think it appropriate, fair and generous in writing and in person. A written offer is important so that there is no misunderstanding caused by lost elements promised over the phone or face-to-face (which the employee will sure remember but you probably won't). And be sure that you present your written offer in person. That way you can review the offer with applicant and answer any questions on the spot. Make it a comfortable situation; offer to "pop out" for 10 minutes while they read through it, then return with a coffee to discuss.
    • In addition to the offer itself, detail the job responsibilities and expectations so that there’s no confusion.
    • Never imply more than you can or plan to deliver by saying, for example “You’ll always have a job at our company.”
  5. Highlight corporate benefits. Although salary may be what most candidates are gunning for, stress the value of your benefits package, especially health insurance, profit sharing, bonuses or any amenities such as retirement or tuition reimbursement and any additional vacation allowances. Additionally, discuss the candidate’s future at the company and room for advancement. A qualified candidate may compare your offer to another but see that he or she has more room to grow with you, plus may like the stock option and bonus program you offer.
    • Open the discussion on how the role might grow over time. Let the employee-to-be explore any questions they might have on this.
  6. Anticipate your applicant’s response to your offer. Prepare yourself for typical and atypical questions to your offer. Some applicants are crafty negotiators, so you will need to stand strong and stand by your offer; this could also be a time that you see something in the potential employee that you really like or don't like! And although it’s fine to let the candidate know you're interested in him or her, avoid coming across as desperate by trying to meet every demand or revision to your offer. If you walk into negotiations with the best possible offer, let the candidate know this is the best you can do, but that you think he or she will make a wonderful addition to the company. It is definitely give and take on both sides to reach a mutually satisfactory agreement.
    • Suggested response where a candidate angles for more compensation: "I understand how you perceive your qualifications. However, given our experience of people in the industry at your level of experience and with the qualifications that you have, the amount that we have offered you is very generous. We think it is a fair offer and we also think that you have a fantastic opportunity to grow here and learn a great deal." Or, if you want to mull it over, ask what they consider to be reasonable compensation and say that you'll think it over and get back to them. You can pick and choose through their counter-demand if that suits best.
    • Suggested response where the candidate wants even more time to think: "Thanks for explaining that you'd like more time Dave. However, we've already given you a week to consider the position and we do need to fill it and get the work started. I would be happy to give you another 48 hours to think it through but after that, I really must have a final response. We'd love to have you join us here, but you must feel it's the right decision."
    • Suggested response where the candidate seems to be holding back for an unknown reason: "Well Jane, you know that we got along really well during the interviews and we'd love for you to work with us; I think your contributions to this organization could take us to new heights." Be considerate and avoid being too pushy, although it's fine to make it clear that indecision time is finite. In some cases, you may never get to the bottom of an indecisive candidate; it could be anything from cold feet at leaving a current job to just finding out a diagnosis of cancer. Don't probe too much, just be ready to enforce a deadline and work down the list.
    • Suggested response where the candidate comes back with a counter-offer due to another company's offer to employ them: In this case, you need to make a snap decision as to how much you want to fight for the candidate. Return to the limits of what you can offer; have you reached these or not yet? If so, refocus on the perks and supportive environment, to contrast your workplace with the other one. However, beyond this, if you don't have more compensation to pull out of the hat, it is probably the best to say that you're sad to lose them to a good competitor and that you know the other company is gaining a great person.
  7. Be flexible but also be honest. There will be a limit to how far you can go and the potential employee should respect this. Be prepared to listen to their preferences and to see if it is possible to compromise on some extra compensation. However, once you have shifted a little and as far as you're willing to go, assert your end point with clarity. There comes a time when the employee-to-be needs to understand that they're not able to get anything more and a decision must be made.
    • For example: "Thanks for your explanation about how you perceive compensation for this role. We did go back and look at the figures. We've found that we can offer an additional $2,000 signing bonus, X company shares if you're with us still in 3 years time and a corner office. I'd love for you to join us but that is as far as we're able to go beyond our original offer and I think it's very reasonable. I hope it works for you, and I'm happy to wait another 24 hours but after that, I really do need your final response."

Tips

  • Know which points are negotiable and which are not. Be sure to have clear explanations as to why you cannot move on some points, such as lack of funds in the area or a cap on the salary, etc.
  • Don’t drag your feet if you find an applicant who is an ideal match for the job. If you don’t act fast, someone else could snatch that person away before you can even present your offer.
  • Keep the door open. While you may need to fill the job opening, keep the candidate in mind if the initial negotiations don’t work out. You never know what could transpire over the coming months or years.

Warnings

  • Know when it's time to stop negotiations. If your candidate seems unsure about your offer ask which area of the package doesn’t meet with his or her requirements. If you can do something about it, revise the offer. Otherwise, file the resume, but let the candidate know to keep in touch.
  • Remember that even though it might be an employer's market, being condescending, pushy or alarmist is not constructive. Be thoughtful about your presentation and avoid ultimatums or expecting an immediate answer. Some people need time to reflect, and 24 hours is reasonable for some types of less complex jobs, while a few days to a week or so is appropriate for other more complex or professional jobs, or if you can afford to wait. Just be sure to set an exact time by which they must get back to you, or else the offer may not remain.

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Sources and Citations

  1. ↑ http://www.futurevisions.org/crr_neg_tips.htm
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