How to Negotiate a Compensation Package for a New Hire

Hiring great people starts with offering them a competitive work culture and compensation package. PayScale’s 2015 Compensation Best Practices Report revealed that a top concern for companies is attracting and retaining the best talent. However, the way any human resource manager handles compensation negotiations must be carefully balanced with other factors.

Talking salary – it’s part of the hiring game

Human Resources cannot separate compensation from the hiring process because it’s integral to bringing on great talent. From the moment that an applicant submits to an interview, the negotiations begin – at least silently at first. The candidate consciously evaluates the company based on the interview experience, the way that the compensation package is presented, and through exposure to the corporate culture. 

How far do most companies go with salary negotiations? Our Compensation Best Practices report indicated that small companies were more likely to adjust compensation to encourage retention (12%) when compared to medium-sized (5%) and large-sized companies (4%). However, the numbers spike when talking about recruiting. Medium (66%) and large companies (65%) are more likely to pay more for competitive positions when attracting candidates that impact the organization the most. 

In this day and age of more transparent compensation policies, company review sites, and salary surveys distributed online, candidates are much wiser about what they want and what they believe they are worth. This can both be a blessing and a curse to HR when the discussion begins to negotiate a fair starting salary for a new hire.

Getting salary negotiations right with a new hire

Salary and benefits are just one part of the process of bringing a new hire into the fold. But, don’t treat this casually. How compensation is discussed early in the recruitment process can make or break a deal with a candidate of choice. Use these guidelines to start things off well.

#1 – Use a friendly approach to win the candidate over

The goal of any recruitment effort is to create a positive experience for the candidate as soon as possible. This effort removes any fears and allows the candidate to explain what he or she really wants. Be friendly and share all the great things that the organization does for employees so that the candidate sees how invested the company is in their career and personal success.

#2 – Highlight the total compensation offered 

Have a total compensation statement prepared for a new hire, with a typical salary range, benefits, and perks that the company provides. Don’t forget about things like generous paid time off, educational and learning support, insurance programs, and performance incentives that employees are eligible for. This gives candidates the bigger picture that just a straight salary figure illustrates.

#3 – Expect counter offers from the candidate 

It’s a given that you will get some push-back from a candidate who has experience in salary negotiations. Allow some wiggle room in the salary offered. Depending on the size and ability of your company, you may be able to adjust the compensation somewhat.

#4 – Think of creative ways to improve the compensation

Consider that compensation is not just about salary; it’s also about the creative perks your company can provide. Pull out all the stops with an outstanding candidate by asking him what he would like the most. There are many creative ways to sweeten the deal – like additional paid time off, company-paid vehicles, access to new technology gadgets, training incentives, a posh new office, stock purchase options, and more.

#5 – Be honest and upfront with the candidate 

Most candidates know that there is a limit to what they can ask for in terms of compensation, and it’s ok to say “no” to some of the requests they make. Being honest and putting the best offer on the table, then negotiating with the candidate to find a happy medium takes honesty. Most want transparency when communicating salary and benefits, so honor this in your conversation.

Want to learn more?

If you need more ideas for talking compensation with candidates, you are encouraged to browse through some of our helpful articles on the topic:

Compensation Strategies that Work

Get Onboarding Right for Better Retention

When Does Paying More Make Good Business Sense?

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