How To Negotiate Salary With IT-Job Candidates

Hiring TipsDeveloper Recruiting

Get the inside secrets on how to set and negotiate salaries with this guide

Why are salary negotiations challenging for both candidates and employers? Because a person's salary reflects their monetary value as a contributor to the company. The majority of candidates are not worth a million dollars.

In order to find a compromise for how much a candidate believes they are worth and how much you, as an employer, value this person’s contribution to your company, you’ll need to master the art of negotiating.

This article will provide a step-by-step guide to the negotiation process, from the moment you open a role until your final communications with a candidate after they either accept or decline an offer.

• Research Market Salaries that are fair
• Check Salary Tools
• Consider Benefits
• Prepare & Remain Transparent
• Make the Offer
• End on a Positive Note

Research Market Salaries that are fair

It is important to research expected salaries for your specific role before posting a job description. A number of factors can affect how much this role is worth to your company, so you should take those into account. Some key factors to consider are:

Industry average.

If you are in the nonprofit industry, you probably cannot pay your team members the same as a company in healthcare or tech.

Company size.

Companies with fewer resources tend to have smaller budgets; take this into account when comparing your salary to others.

Economic conditions.

It is no secret that economic conditions have a large impact on businesses, employment and salaries. Unemployment rates at all-time-lows indicate a candidate-driven market, so you may need to increase compensation offers to obtain the best talent.

Geography.

Companies located in big metropolitan cities where employees are expected to incur elevated costs of living are likely to offer higher salaries than companies in small-town America.

Cost of living.

The cost of living usually rises by 2-6% annually, and employees should anticipate a salary increase of at least that much.

Commission.

Determine whether the role you are hiring for has a set salary, or if it instead has a base pay with commission. It is common for sales candidates to expect commission as part of their salary, so determine the range and average amount of commission new employees can expect.

Skills.

When writing job descriptions, define a set of skills needed for candidates to be successful in the role, considering how much each skill is worth. It is unlikely that you will find a candidate with every single skill, so estimate what skills will increase a candidate’s starting salary. There could also be a skills surplus or shortage in your specific industry or geographical location that will contribute to this factor.

You can use a candidate's skill deficit to your advantage during negotiations, offering learning opportunities instead of a higher salary.

Managerial responsibilities.

Determine if this person is suited for an individual contributor or managerial role. The salary for managing employees should be greater than for those of the same level and experience who are individual contributors because of the increased responsibilities and challenges.

Experience.

When writing a job description, you will often be expected to include a range of experience levels that are appropriate for the role. Consider how much experience a candidate has when determining their salary range.

Seniority.

It is not surprising that people early in their careers or who have recently switched career paths will have different salaries from people later in their careers or at higher seniority levels. You should consider that when setting your base for the salary.

Company average.

In order to understand what salaries are common for people in certain roles and with different levels of experience at your company, look not only at industry and competitor rates, but also at your internal salaries.

After you have gathered all this information, you will be able to determine the fair market value for your role and proceed to the next step of the negotiation process.

Check Salary Tools

When conducting research, it is advised to utilize online salary tools. These tools aggregate information provided by current and past employees who share information about their roles, including compensation information. These tools can be used to calculate average salaries by job title, location, company, and a number of other factors.

Please be aware that these tools are not perfect and may not be entirely accurate. If an employee inputted their salary as a million dollars, it would skew the results for average and median salaries. Before you rely on these tools, investigate how they calculate their results to see if they account for outliers. Furthermore, it would be wise to cross-check salaries across multiple tools to get a more comprehensive range of data.

You can research local salaries in each of our markets including Austin, Boston, Chicago, Colorado, Los Angeles, New York City, San Francisco or Seattle. By accounting for outliers, these salary tools provide the most accurate information available, though no salary tool is perfect. Once you have ascertained the appropriate salary for the position, you can continue to analyze the full compensation package.

Consider Benefits

Make sure you consider the whole compensation outside of monetary means when negotiating with candidates, which includes social benefits as well as other perks. It is crucial to have a complete inventory of what you have to offer, as well as an understanding of the worth of each item. Why is that? Additive bonuses in the form of perks and benefits can have a significant impact on the outcome of a negotiation. In addition, certain benefits and perks will motivate candidates more so than a higher salary.

It is important to know the monetary value of each perk and benefit when offering a compensation package so that candidates are aware of the full value of what is being offered.

The following benefits increase the value of your offer:

• Award bonuses: performance bonuses, severance package, commission, relocation assistance
• Insurance plans may vary, but some common types are medical, dental, disability, FSA, life, pet, and vision.
• Retirement benefits
• More holidays, sabbaticals, increased vacation days
• Stock options
• Paid food, beverages, coffee, fruits and vegetables
• Child care, company kindergarden
• Family benefits
• Additional education possibilities
• Gym membership grant
• Company car, company phones, company laptops

In addition to monetary compensation, non-monetary perks and benefits, like mentoring, promoting from within, and learning opportunities, should be taken into account.

Stay transparent

It is illegal to ask candidates about their current or past pay in a number of cities and states. However, if you have done extensive research and are certain in the amount you are offering for the role, it should not matter what the candidate made in their last position.

It is important to be transparent about your salary expectations during the recruiting process. By the time you post your job description, you should have determined the salary range for the role. To keep things uncomplicated, include that salary range in the job posting.

If you are upfront about compensation from the beginning, you will save time recruiting candidates who would not accept your compensation offer in the end. If a candidate's skills and experiences don't match the job description, it will be evident pretty quickly whether their motivation is simply monetary.

In the final stages of the recruiting process, be transparent about the salary range or salary band. If you have a great candidate and the salary range is flexible, please let them know. Otherwise, let them know that their salary will be determined based on their skills and experiences within that given range.

Have a conversation with the candidate about compensation details within a reasonable time frame after the job offer has been made. When the deadline is reached, please set up a phone call with the candidate to discuss their salary expectations. Please reach out to other qualified candidates if the current candidate does not complete the task on time.

You have checked salary tools, considered your benefits and perks, and gone above and beyond to understand pay disparities and biases that affect people of different demographics. Now that you already shared the salary range that is acceptable to you, it is time to have the negotiation with the candidate and give them a deadline.

Make an offer

No matter how the conversation ends, you should make an offer.

It would be best to have this conversation over the phone instead of in-person or through email to reduce the risk of miscommunication and to avoid any tension from an in-person discussion.

If you are feeling nervous, it is likely that the candidate is as well. It is important to be prepared and confident when engaging in this conversation, but it is also essential to come with a calm and understanding energy.

When you are discussing salary expectations, be direct and state the specific number your team has set. Can you please explain how your team came to the conclusion that the amount reflects their current skill set, experience, etc.?

It has been suggested that in order to have something to negotiate with, you should set your initial offer lower than what you are actually willing to pay. However, this may contribute to wage gaps. As mentioned earlier, people of different demographics have different negotiation tactics for salaries, so bridge those pay gaps by paying each individual what they're worth to the company.

It is important to not just include salary when extending an offer to a candidate, but also to go over all of the benefits and perks your company has to offer. Where possible, include the monetary value of each benefit so that candidates are fully aware of the offer's worth.

After you have covered the compensation package in full, invite the candidate to share their thoughts and opinions. You will be able to discern immediately whether a candidate is enthusiastic and willing to sign an agreement or if they are reluctant and dissatisfied with the offer you have presented. It would be helpful if you could explain to me what your expectations are and how my offer does not meet them. Once we have discussed this, and you either agree to the offer or remain unhappy, I have two options.

Option 1:

If you are unsure whether you can meet their demands, ask them exactly what they need to accept the offer. I would recommend that you request they send an email with the specific standards they expect for this role so that you have time to think about their counter-offer and so you have it in writing. Afterwards, ask to schedule a follow-up phone call within 24 hours so you can talk with your team about where you can adjust the salary, add perks and benefits or revise the job description. Then, reach out to the candidate at the appointed time to deliver your counter-offer.

Option 2:

If you have an idea of what your team is willing to budge on in regards to the compensation package, you can provide a counter-offer now or let them know that your offer is not flexible and that it is the best your company is able to offer.

It is essential that neither you nor the candidate settle for anything less than either is worth. You also don't want to give in and overpay the candidate more than what your company can afford or more than what you pay to other employees of similar job positions. Doing so will also negatively affect wage gaps.

After you pose a counter-offer, the candidate will make a decision.

End on a Positive Note

It is essential that you maintain a positive attitude throughout the conversation, regardless of the negotiation's outcome.

First, try to imagine what the candidate is feeling. They have been seeking employment for weeks, if not months. They find a position they are passionate about and go through the entire interview process. In the final stage of decision-making, it does not work out and they have to start the process again from the beginning. Though they may have other employment options, it is crucial to acknowledge the amount of time and effort candidates have put into interviewing for your company.

After the candidate chooses to accept the offer, an official job offer letter will be sent either via mail or digitally. The candidate will need to sign and date the forms to make it official. You should show enthusiasm in the letter, as well as the official start date. If they are not starting for a few weeks, you should consider sending them a swag package to get them excited, or invite them to team outings so they have a chance to meet your team in a casual setting before they start. This may also help reduce some of the anxiousness that comes with starting something new.

Send a ‘thank you’ letter if they decline your offer to show your appreciation for their time and consideration of your role. By this stage, they will have probably spent several hours over the course of several weeks and months researching your company, applying for the role and going through the entire recruitment process.

The time you invested in this opportunity likely resulted in feelings of disappointment when it did not work out. You can use this as an invitation to join your talent community. If the candidate has made it to this point in the recruitment process, they are a strong match for your team. Though this opportunity did not work out, they could be a better match for a role that will open up in the future. By joining the talent community, candidates will be amongst the first to know about open roles. A positive recruitment process increases the likelihood of re-application, saving the team time and money by being able to connect with a candidate they have already vetted.

Negotiating salaries can be complicated and stressful. However, with research and knowing the value of your benefits package, you will be successful. The discussions about the salary will not be alike, but you will undoubtedly become a master of negotiation.