Man smiling shaking hands with woman across table
  • 09 Dec 2019
  • 4 min read
  • By James Hawes

Negotiating remuneration with new employees

HR, Negotiating, Remuneration

When hiring new staff, there are a lot of aspects to be negotiated - annual leave, flexibility, hours, car or transport allowances, just to name a few. Of these, the one that tends to bring the most anxiety - to employer and employee alike - is pay.

Here, the goal of the prospective employee is fairly straight forward - more money is better. As an employer, your goal shouldn't be the inverse - to see how little you can get away with paying your employee. Instead, you want them to feel wanted and valued, without blowing your budget.

Think ahead

If the candidate is the one you really want, the last thing you need is them walking away because you've low-balled them at the start of negotiations. If they don't feel like you value them, they aren't going to want to work with you.

Regardless of whether your proposed payment scheme is a salary, a retainer with commission, or commission only, avoid putting forward a number that is dramatically lower than what you'd be willing to pay.

Firstly, it looks as if you don't think they're worth much, or it makes you look stingy (or like your business is in dire straits). They may feel slighted by the low offer and immediately decline the position, without further negotiations.

Secondly, it forces them into the awkward prospect of having to counter-offer with a dramatically higher figure. Many candidates would rather avoid that process altogether and simply go elsewhere.

The more time and research you put in, the more accurate your initial offer will be. Consider market averages, but take into account your candidate's experience, track record, qualifications, and any other considerations.

Be realistic

Try to keep your offer within $10,000 (or the per cent commission equivalent) of what you can actually afford to pay them. Employees like to feel like they've successfully negotiated their pay, so counter offers aren't unusual, but provided your proposal was well researched, it shouldn't be too far off the mark.

Try not to balk if the candidate asks for an extra $5,000 - $10,000. It may seem a lot of money, but it works out to roughly $100-$200 per week, after tax. Effectively, your employee is asking for some money to go towards rent, or a single grocery shop per week. If the candidate is somebody you want working for you, that might not be too much to ask.

When you do accept their offer, don't go into extraneous detail about why. Unnecessary and awkward conversations about how you can't really afford it but you're willing to because the candidate is great will only result in an uncomfortable employee who feels like a burden.

Ask questions

As for actual negotiations, it's important to be open and honest. Don't be afraid to ask the candidate what they're looking for in terms of remuneration and benefits. This can help avoid a lot of uncertainty and mismatched expectations right from the beginning.

If you want the would-be employee to listen to your proposals and expectations, it's only fair that you do the same for them. Negotiations are about personability as much as they are about what you can bring to the table in terms of compensation. If you can prove that you're understanding and willing to actively consider your employee and their needs, they're going to be more receptive to your proposals and more open to the prospect of working for you.

As mentioned earlier, there are many things besides money to be considered, and some may be just as important as pay to your candidate. Employees are people first, and many might be willing to take a smaller salary if it means more annual leave, the ability to work from home, or some other form of compensation.

You can then later reward the well-deserving employee with bonuses - whether that be a flat raise in pay, or incentive-driven bonuses for meeting certain criteria or KPIs.

Throughout the negotiations, stay focused on the goal. You aren't setting out to see how cheap you can get an employee for; you're trying to build the team that will see your business flourish. Don't become the business owner who rues the day they let an exceptional employee go because they asked for an extra $100 per week.

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